A tax Levy is an administrative action by the Internal Revenue Service (IRS) to seize property to satisfy a tax liability. In layman’s terms, it is the process the government can use to take your property (bank accounts, income, real property, investments, etc.). It is one of the most powerful enforcement actions the IRS has in its arsenal. If you ignore the several attempts by the IRS to have you voluntarily bring your account into compliance, the IRS can, and usually will, use a tax levy to attempt to collect the debt.
Tax Levy is the general term used when the IRS is staking claim on your property. There are many forms a tax levy can take, and with each form the IRS has a specific way of staking that claim.
IncomeWage garnishment or a wage levy can be levied against your income if you are a W-2 employee. This type of levy, once issued, can be enforced until either the entire debt has been paid in full or the statute of limitations has been met. In other words, it is an ongoing levy.
Bank LevyA bank levy is considered to be served when the bank receives it and it is not considered an ongoing levy. At the time the levy is served the funds in your account will be frozen for 21 days. This allows you 21 days to either resolve your delinquent account or to notify the IRS that an error has been made and the account should not have been levied. If after the 21 days and the IRS has not released the levy, the funds will be sent to the IRS. The IRS can take all the available funds in the account up to the balance of the delinquent tax amount.
After the levy has been enforced (when the bank receives the levy) any new funds deposited into your account will not be within the reach of the levy that was served. A bank levy is used at a moment in time for whatever available funds are in the account at that moment in time. Future funds might be subject to a future levy, but they can’t be included in bank levy that was already executed.
Real Property LevyA real property levy (property consisting of land or buildings) is when the IRS files a lien against property. This type of levy will have a government-recorded document that reflects the portion of the equity the IRS is levying. This lien means the property cannot be sold and or refinanced until the IRS is paid in full, if there is sufficient equity to pay the balance in full and if there is not sufficient equity then the IRS will allow a portion of the debt to be paid down at the time of the sale or refinance. The IRS will try and work with the property owner, but, if all else fails, the IRS can force the sale of the property. Usually this is not used on the family home, but in extreme circumstances the IRS can force the sale of the family home as well.
These are the 3 most common levies used by the IRS, and the IRS will usually record the levy at the county recorder’s office for the county you reside in. This will cause the tax levy, also referred to as a tax lien, to appear on your credit report.
Notice Of A LevyThe IRS is required to send you a “Notice of Intent to Levy” before they can levy any of your assets. However, in extreme situations where the IRS has reasonable cause to believe you are trying to sell the asset and not pay your delinquent tax bill they can levy an asset without providing you a notice of intent to levy.
Protecting Yourself From A LevyThe IRS uses enforcement actions like a levy when you ignore the IRS request to bring current your delinquent tax bill. Ignoring the IRS when you have a delinquent tax debt is the number one way to have a levy issued against your income, bank accounts or real property. It is important to make sure you keep the channels of communication open with the IRS, especially if you legitimately can’t afford to pay your tax debt. The more you can’t afford to the pay your delinquent taxes, the more important it is to stay in contact with the IRS. If you can’t afford to make payments toward your delinquent tax bill, then you defiantly can’t afford to have them issue a levy and seize your bank account and/or garnish your paycheck.
What, You Want Me To Call The IRS…. No WayThinking about reaching out to the IRS can be a very intimidating thought. However, in recent years the IRS has been easier to work with, and, for the most part, they are ensuring that the taxpayer’s rights are not violated. Believe it or not, the IRS will be happy to hear from you and will give you the time you need to prepare you documents and get your finances in order. So don’t be afraid to reach out to them. It could be one of the best calls you make this year. By staying in contact with the IRS and working toward a resolution, you can protect yourself against a tax levy.
What To Do Before You Make That First Call To the IRSYou need to make sure to have a game plan in place, to have an understanding of how tax resolution works and to understand what your rights are. This is not rocket science, and, in fact, we have created an E-Guide to tax resolution just for this purpose. Our E-Guide will provide you with all the information you need to know to resolve your taxes for the least amount - from start to finish. As a matter of fact, within just a few minutes of reading our E-Guide you will have all the information you will need to ensure the IRS won’t want to use a tax levy against you. Once we teach you the “Insider Secrets’ to tax resolution we will then help you complete the required paperwork using our proprietary software, The Resolution Assistant. From discovering the insider secrets to crossing the last “T” on the paperwork you need to complete for tax resolution, it all can be done in a few short hours on a Saturday afternoon.
Want to learn more about tax resolution in general and specifically how our company, The Tax Settlement Group, can assist you with resolving your delinquent taxes for the least amount. We encourage you to visit our website or call us at 877-801-9166 and let one our Resolution Assistant Specialists explain your options.