A levy is a legal seizure of your property to satisfy a tax debt.
Levies are different from liens.
A lien is a legal claim against property to secure payment of the tax debt.
A levy actually takes the property to satisfy the tax debt.
Where does Internal Revenue Service (IRS) authority to levy originate?
The Internal Revenue Code (IRC) authorizes levies to collect delinquent tax. See IRC 6331.
Any property or right to property that belongs to the taxpayer or on which there is a Federal tax lien can be levied.
The Internal Revenue Service must take the following steps prior to a levy being issued.
The IRS will usually levy only after these three requirements are met:
- The IRS assessed the tax and sent you a Notice and Demand for Payment (a tax bill);
- You neglected or refused to pay the tax; and
- The IRS sent you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy.
The IRS may give you this notice in person, leave it at your home or your usual place of business, or send it to your last known address by certified or registered mail, return receipt requested.
Please note: if the IRS levies your state tax refund, you may receive a Notice of Levy on Your State Tax Refund, Notice of Your Right to Hearing after the levy.
When will the IRS issue a levy?
If you do not pay your taxes (or make arrangements to settle your debt), and the IRS determines that a levy is the next appropriate action.
The IRS may levy any property or right to property you own or have an interest in.
For instance, the IRS could levy property that is yours, but is held by someone else (such as your wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions).
Or, the IRS could seize and sell property that you hold (such as your car, boat or house).
TheCPATaxProblemSolver can get levy lifted within 24 hours so that you can breathe easier.
UNDERSTANDING IRS LEVIES
If you are one of the millions of American taxpayers who find themselves in the IRS’s crosshairs, an IRS levy is stressful and disruptive at best, and financially catastrophic at worst.
The IRS is in the business of collecting money for the Federal Government and often finds itself in the position of needing to compel taxpayers to meet their tax obligations. Levies are one the tools they use for that compulsion.
The IRS prefers seizing liquid assets such as bank accounts, wages (through garnishment), and social security benefits. However, they will also seize and liquidate assets such as retirement accounts and cash value life insurance policies. The IRS will even seize and liquidate vehicles and real estate if the assets hold sufficient equity to justify the cost of the liquidation process.