Tax Levies

Back taxes are among the most difficult debts to eliminate. Bankruptcy doesn’t always  eliminate all of your taxes owed, which makes it complicated to get out of the dilemma. Furthermore, the federal government gives the IRS a lot of power when it comes to bringing down harsh collection actions to collect a tax debt.

Liens and levies are the two most serious collection actions that the IRS takes against tax payers.

Tax levies provide the IRS the legal right to take your assets. With a tax levy, the IRS may:

Freeze your bank accounts.
Garnish your wages.
Seize personal property.
Seize assets like cars and other vehicles that you own.

Here are a few examples of how tax levies can inhibit your life and hurt your future:

You owe taxes, and the IRS places a levy. You go to the bank to withdraw funds, and the bank notifies you that the IRS froze the account. Now you can’t access any of your money.

Every two weeks when you receive a paycheck, you get the usual deductions. Now, you also have a significant portion of your earnings held back because that money goes to the IRS to satisfy the debt. The leftover money may not be enough to pay your bills.

The IRS seizes your property. You lose a home or car, and you will not recoup anything from the sale. All the proceeds go directly to the IRS to resolve back taxes.

The IRS has significant power much different than any other creditors. Therefore, if you owe a substantial amount in back taxes, you should speak with us immediately before the IRS pursues additional action.

A levy is a procedure the IRS uses to collect money that you owe to the federal government. Consequently, the IRS may collect funds in several different ways to resolve the debt.

It is vital not to let your back taxes get to the point of a levy. Thankfully, there is usually enough time to act before the IRS even sends a warning of a tax lien or levy. If you do find yourself facing a levy, contact a tax professional immediately to discuss your options.

The good news is that most taxpayers are not caught off guard by collection actions. Generally, taxpayers have a lot of notice before things get to the point of a lien or levy.

Typically, the IRS will take the following steps:

The liability  is assessed after you file a tax return, or the IRS files a tax return on your behalf.

Individuals who owe money receive a tax bill from the IRS notifying them of how much they owe. The letter is sent to the last known address on file at the IRS. This is why some delinquent taxpayers do not receive important notices if they have not filed returns in years, or have recently moved.

The IRS generally gives you ample time to resolve the tax debt. During this time, you can arrange a resolution that is within your cash flow means.

You will receive a Final Notice of Intent to Levy. The letter will also contain a Notice of Your Right to a Hearing. Once you receive a Final Notice of Intent to Levy, you have 30 days to act before the IRS can start freezing your accounts, garnishing wages, and seizing assets.

Levies are a last resort for the Internal Revenue Service. Therefore, if you receive a Final Notice of Intent to Levy, it is incredibly important to speak to a tax professional immediately. Don’t wait for the issue to worsen.

If the IRS levies your wages, salary, or federal payments, the levy will end when:

The levy is released.
You pay your tax debt.
The time expires for legally collecting the tax.

If the IRS levies your bank account, your bank must hold funds you have on deposit, up to the amount you owe, for 21 days. This holding period allows time to resolve the matter. After 21 days, the bank must send the money plus interest, if it applies, to the IRS.