A tax levy is one of the most destructive collection tools used by the IRS, which involves legal seizure of taxpayers’ assets against outstanding tax bills. A tax levy should, however, not to be confused with a tax lien. A tax lien is only a claim made against taxpayers asset, whereas a tax levy is the legal seizure of the assets. If you have any unpaid tax bill, the tax authority can levy your bank accounts, financial belongings, investment accounts, wages, pension, insurance policies, and even physical assets to satisfy a tax debt. The post outlines various types of tax levies charged by the IRS and the way out.
During a bank levy, the tax authority contacts your bank and demands to freeze the available fund in your bank account and deduct money depending on the owed amount. In case the debt is not fulfilled in the first go, the IRS would keep coming back to your account as and when the money appears. When it comes to the bank levy, any account on your name is at the risk of seizure whether it is your money or not. Financial institutions are under obligation to comply with IRS requests as non-compliance makes them liable for severe penalties. Once your bank account is under the IRS scrutiny, you may not be able to access the funds.
A wage levy, also known as wage garnishment, is the deduction of a part of your wage against an outstanding tax debt. The IRS contacts your employer demanding a certain percentage of your pay for unpaid taxes. Your employers will never deny such request, as doing so would make them liable for the amount owed. Wage garnishment is a continuous process and the amount would continue to be sent to the IRS unless you have any alternatives to fulfil the debt or the tax authority has collected enough amount. That said, the wage garnishment can be reduced or removed, if a tax attorney proves your hardship to pay the taxes.
The Way Forward
The IRS uses levies as a last resort to collect tax dues and is willing to make other arrangements to resolve outstanding tax bills. There are various arrangements that can help you stop tax levy, such as payment plan, offer in compromise, and appeal among others. If you are facing any tax levy, it is advisable to take swift action or immediately seek professional assistance for IRS problem resolution. If you are looking for any IRS tax problem help, feel free to get in touch with The Law Offices of Nick Nemeth. Leveraging more than a decade, we are helping businesses and individuals with various IRS tax debt problems. Call us at (972) 627-4580 or fill out the contact form and we will get back to you shortly.