Tax Levy

If you're facing a tax levy, you need the professionals on your side. Tax Champions has been helping clients with their tax issues for over 35 years. We can help you overcome tax obstacles and get your financial situation back on track. 

What is a Tax Levy?

The IRS has the legal right to impose penalties on taxpayers who don’t pay their taxes on time. The IRS also calls some of these penalties tax levies.

For example, a criminal who fraudulently reported income may face a penalty of jail time. Another example is a taxpayer who hasn't filed their return on time. The IRS will likely assess a monetary fine or a lien on their property. Tax levies refer to these types of penalties. Overall, they're an alternative to the penalty of jail time.

The IRS explains a tax levy as “a legal seizure of your property to satisfy a tax debt. Levies are different from liens. A lien is a legal claim against property to secure payment of the tax debt. While a levy actually takes the property to satisfy the tax debt.” The IRS generally reserves this option for cases in which their attempts to contact the taxpayer have been repeatedly unsuccessful.

Methods of IRS Tax Levy

The IRS has legal access to several types of levies.

Firstly, the IRS conducts a full and thorough assessment of the taxpayer’s assets. Afterwards, the revenue agent determines which levy is the easiest collection process. This varies according to each taxpayer’s individual resources. Wage garnishments and bank levies are chiefly among the most common methods of tax levy.

A wage garnishment is also known as a wage levy. Accordingly, the IRS uses this method to obtain regular payments from the taxpayer’s paychecks. They contact his or her employer with a notice directing them to withhold a specific amount from their employee’s paycheck. Then, the IRS applies the withheld wages to the employee's past tax debt.

Wage garnishments continue until the debt is paid in full, regardless of employment changes. Should the taxpayer start a new job while the garnishment is in effect, the IRS sends a notice to the new employer. A wage garnishment can be stopped or reduced in some cases if the taxpayer makes other suitable payment arrangements.

How a Wage Garnishment Works When You Have More than One Job

The IRS has some limitations when garnishing wages. For example, they won't take your whole paycheck and leave you with nothing for basic living expenses. In fact, the employer will give you a form to fill out. It asks for some information pertaining to your filing for the current year, such as your filing status and number of dependents.

You must fill this form out and return it to your employer within three days. Generally, the IRS will only have your employer withhold an amount in excess of what you need for your basic living expenses. While that may include food and rent, it doesn't include your gym membership or Netflix subscription. In other words, what the IRS is likely to leave you with will only cover minimal expenses.

Furthermore, all sources of income are combined for these garnishment limitations. For instance, if you work two jobs to cover your monthly expenses, then both paychecks may be garnished. It's also possible that the IRS will only garnish one paycheck and not the other.

To obtain back tax payments via bank levy, the IRS sends a notice to the bank directing it to freeze funds in your account. The freeze remains on the taxpayer’s bank account for 21 days. Consequently, this gives the taxpayer an opportunity to address the levy before the IRS applies the funds to his or her back tax balance. If the bank account balance isn’t enough to pay the debt in full, then the levy will remain in effect until it's eliminated.

Note: A bank levy may be lifted in extraordinary circumstances. For more information, contact a reputable tax relief professional.

What to Do if You Receive a Notice of Levy from The IRS

Firstly, if the bank notifies you of an impending levy, immediately determine which entity is responsible for it.

If you determine that the IRS has put the levy on your account, examine your records and verify the debt.

The IRS may lift the levy if they find that it’s an error. Errors may be more common than you realize, so don't skip this step.

They may also lift the tax levy if they find that it creates a significant financial hardship on the taxpayer or another agreement for payment is made.

Contact a qualified tax professional to represent your best interest in a negotiation with the IRS to remove a levy.

The IRS strives to obtain the full amount of the back-tax debt balance from the taxpayer.

Your tax representative’s savvy understanding of tax law and IRS procedures allows him or her to establish an affordable payment agreement for the lowest possible amount.

Why You Should Choose Tax Champions to Help You With an IRS Levy

Tax Champions has been assisting taxpayers with a wide variety of tax levies for over 35 years.

Our experienced and qualified staff acts fast in the event of a hardship caused by a levy, as we’re committed to the financial well-being of our clients.

If you received a Final Notice of Intent to Levy or discovered a levy on your property, bank account, wages or more, give us a call immediately.

We’re available evenings and weekends for the convenience of our clients; give us a call now.

During our first conversation, we’ll be happy to conduct a private, free consultation to go over your circumstances and determine your options.

If you decide our services are a good fit for your needs, we’ll get started right away.

Give us a call today at 888.518.8964 or reach out to us by submitting your contact information in the blue box on the right side of the page. Sleep better tonight knowing that our team is acting immediately to resolve your issue. Call now.


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Walter Wotman, CPA

Founder & Managing Partner

Walter Wotman's Tax Champions authored this helpful Guide to IRS Tax Resolution for American taxpayers. He is one of America's most experienced tax negotiators with over 35 years of experience helping thousands of clients settle difficult back tax issues.

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