04 Jul Intent To Levy Explained
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.
Taxation authorities are allowed to levy your:
- Bank accounts
- Investment accounts
- Social security
- Insurance policies
- Physical assets
General Tax Levy Process
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:
- The IRS will file a tax return on your behalf, or you will file a tax return with money owed to assess the tax amount
- You’ll get a tax bill sent to your last known address
- You’ll get a Final Notice of Intent to Levy, and Notice of Your Right to a Hearing forwarded by the IRS; if you don’t pay what you owe within 30 days since you got the notice, the levy will start
Tax Levy Types
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.
Seizure of Passports:
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.
Stopping a Tax Levy
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:
- Enter into a payment plan
- Submit an offer in compromise
- Prove financial hardship
- File an appeal
Contact Golden Tax Relief for Help
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.