A tax levy is one of the harshest collection mechanisms used by state taxing authorities and the IRS. It is the legal seizure of taxpayers’ assets when there are taxes owed. A tax levy is different from a tax lien in a sense that a levy is the seizure of the assets, while a lien is only a claim on the assets.
The actual implementation of a tax levy will never catch you off guard because you’ll get several notices from the IRS and other state tax authorities beforehand. Expect the IRS to go through the following steps before levying:
Typically, the taxing authorities look to find the easiest method for them to get the owed money back. Here are the common levy types:
The taxing authority contacts your current place of employment and the HR department, asking for a portion of your pay deducted from your paycheck. That portion is going for unpaid taxes, and the installment is decided depending on how much you owe. This type of levy will remain in place until your entire debt is settled.
The IRS contacts your bank, demanding all of your accounts are frozen. Then, 21 days later, what you owe is deducted from your account. In case you don’t have enough funds on your bank account, the IRS will keep coming back until they get the money you owe.
In satisfying the tax debt, the taxing authority may seize your assets and sell them. They could take items such as your house, car, or your boat.
If this form of a levy is issued, the IRS cannot go after anything owed to you in the future for work to be done, but they can levy any amount you are owed currently.
If you owe at least $50,000 or more, the IRS can request from the State Department to deny or revoke your passport.
The forms mentioned above aren’t the only types of tax levies issued by taxing authorities or the IRS. You can also have your retirement accounts, licenses, dividends, life insurances, rental income, commissions, and accounts receivable levied.
The taxing authorities usually attempt to find ways to agree with taxpayers than resort to levies. If you or a tax-professional working on your behalf react swiftly, you’ll be able to stop a levy in plenty different ways and iron out your IRS tax debts. Here are a few:
If you’ve found yourself in a situation you can’t solve, or would rather have it handled by a professional, contact us at Golden Tax Relief – our professionals will work and negotiate on your behalf to figure out the best method to get your levy released.