Comparison of IRS Bank Levy and Wage Levy
  • March 29, 2024
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When dealing with the IRS, understanding the nuances of various tax enforcement actions is crucial. Two common actions that often cause confusion are the IRS bank levy and the IRS wage levy. At The Law Offices of Nick Nemeth, a premier tax attorney firm in Dallas, Texas, we frequently encounter questions about these levies, especially concerning their differences and implications. In this blog, we aim to clarify these differences, using our experience to provide accurate and relevant information.

Understanding the IRS Levy

An IRS levy is a legal action taken by the Internal Revenue Service to seize assets to cover unpaid taxes. This can be a distressing experience for anyone, but understanding the specifics can help in effectively addressing the situation. There are two primary types of levies that the IRS uses: the IRS bank levy and the IRS wage levy.

What is an IRS Bank Levy?

An IRS bank levy is a specific type of IRS levy where the IRS legally seizes funds from your bank account. This action is typically taken after the IRS has sent multiple notices demanding payment of tax debts. When facing an IRS bank levy, especially a bank levy in Texas, the process involves the following steps:

  1. Notice of Intent to Levy: The IRS will send a final notice, giving you 30 days to respond or pay the debt.
  2. Levy Action: If the debt is not settled, the IRS will contact your bank to freeze your account and seize the funds.

A bank levy attorney can assist in navigating this process, providing IRS tax lien help, and potentially stopping the levy before your funds are taken.

What is an IRS Wage Levy (Garnishment)?

An IRS wage levy, also known as IRS wage garnishment, is another form of IRS levy where the IRS requires your employer to withhold a portion of your wages to cover your tax debts. The process includes:

  1. Employer Notification: The IRS notifies your employer of the levy.
  2. Wage Withholding: A part of your salary is sent directly to the IRS each pay period until the debt is paid, an arrangement is made, or the levy is lifted.

Understanding IRS wage garnishment is crucial for employees, as it directly impacts their income and financial planning.

Key Differences Between Bank and Wage Levies

  1. Asset Type: A bank levy targets funds in your bank accounts, while a wage levy affects your salary or wages.
  2. Duration: A bank levy is a one-time action per notice, seizing what is in the account at that time. In contrast, a wage levy continues until the debt is resolved.
  3. Immediate Impact: Bank levies can freeze your account instantly, whereas wage levies impact future paychecks.

Effective Strategies for Dealing with IRS Bank and Wage Levies

When confronted with an IRS bank levy or wage levy, it’s essential to adopt effective strategies tailored to each type of levy. These levies can have a profound impact on your financial life, and a strategic approach is key to managing them successfully.

Strategy for an IRS Bank Levy

Upon receiving an IRS bank levy notice:

  1. Act Quickly: Time is of the essence. You have a limited period to respond before the funds are seized.
  2. Review Financial Records: Ensure all your financial statements and tax records are in order. This will help in any discussions with the IRS or a bank levy attorney.
  3. Explore Release Options: In some cases, the IRS may release the bank levy if it causes significant economic hardship. Understanding these provisions is crucial.

Strategy for an IRS Wage Levy

When dealing with an IRS wage levy:

  1. Assess Financial Impact: Calculate how the IRS wage garnishment will affect your monthly budget and financial obligations.
  2. Explore Adjustment Options: You may be able to adjust the amount withheld by updating your dependents or filing status.
  3. Long-term Solutions: Consider long-term solutions such as setting up an installment agreement to manage your tax debts more effectively.

Proactive Steps to Take

If you suspect you might be at risk of an IRS levy, there are proactive steps you can take:

  1. Stay Informed: Keep track of all communications from the IRS.
  2. Seek Early Assistance: Don’t wait for the levy to be in effect; seek advice as soon as you receive a notice.
  3. Understand Your Rights: Know your rights and options, which can include setting up a payment plan or contesting the levy.

Get Help with IRS Levys

Understanding the difference between an IRS bank levy and an IRS wage levy is crucial for effectively managing and resolving tax debts. Whether you’re facing a bank levy in Texas or an IRS wage garnishment, it’s important to act promptly and seek professional help. At The Law Offices of Nick Nemeth, we are equipped to provide the guidance and representation you need to navigate these challenging situations and work towards a resolution. For more information or assistance with IRS levies, IRS tax liens, or other tax-related concerns, contact our team at The Law Offices of Nick Nemeth. We are dedicated to helping you find the best possible solutions to your tax issues. Call (972) 426-2553 or fill out the contact form.

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My first appointment I had with, Tax Attorney Nick Nemeth, gave me such a sense of relief. He listened and gave me his professional advice, Mr Nemeth took my case. I was well kept updated, by phone calls and letters. That really impressed me and gave me so much confidence in them. The case went on for a couple of months. The day I received the call from one of his team members Kyle, informing me that the case was resolved and that I owed absolutely nothing to the IRS, I was overwhelmed with joy. I would recommend this law firm to anyone that needs help, with any tax issue. Thank you, to the Law Firm of Attorney Nick Nemeth and his team.
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I received a tax bill in the mail from the IRS last year in 2023. The fees and penalties I owed were something I myself could not afford. I reached out to Nick Nemeth's firm and received the best experience you could imagine. The team was professional, educational, and fast. If you have a tax issue with the IRS using another firm other than Nick Nemeth's would be an error in judgment. I would recommend their services above others.
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Working with Nick Nemeth and his team to resolve my debt with the IRS was the best decision I could have made. I felt such relief knowing I didn’t have to deal with the IRS myself. They did a wonderful job and were responsive to my questions and kept me abreast of my case. My outcome was exactly what I was hoping for. I strongly recommend using them if you have an issue to resolve with the IRS.
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I had an incompetent tax preparer, who also ignored several notices from the IRS, which in the end resulted in a lien on my property. I did not know what to do and an attorney friend recommended that I contact the Nick Nemeth Law Offices. I met with Jamie Flores and Ivan Nalbantov in December 2021 for a free consultation, and right away was impressed by their thorough examination of my paperwork and extensive knowledge of IRS tax laws. I felt not pressured and appreciated their advice and in the end decided that I would pursue resolving the issue by myself. I paid the IRS Civil Penalty and, as recommended also submitted a letter to the IRS requesting a refund and explaining what happened. I am glad to report that my persistence finally paid off. My case took two years to resolve and I finally received a full abatement/refund check from the IRS in December 2023. I could not have done this without the straightforward recommendation of Jamie and Ivan; and I highly recommend the Nick Nemeth Law Offices to anyone needing help with the IRS.
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I would like to thank Mr. Nick and his staff for the superb help that I received from them. My IRS problem was resolved quickly and efficiently. It took 2 visits to convince me that I was over my head. I thought that I could call the IRS, appeal my tax notices and settle on a payment plan on my own. After many phone calls to the IRS, waiting sometimes more than 4 hours with no resolution to speak of, it proved to be extremely difficult and stressful. Revisiting Mr. Nick was a huge wake up call. My account was reviewed, and a payment plan was established with the IRS within a week. I will be forever grateful to the staff who worked on my case and especially to Lorna who listened to me vent while going through this painful process.
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The Nemeth Law team is exceptional. They treat their clients like a family member who is in crisis. They want you to get the best possible outcome. I really appreciate everything that they did for me. Jake and Ashley had the greatest role in my case and it all turned out for the best for me. Thank you Nick and team for easing my fears and getting me through the long process. I'm truly grateful.
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