What Is a Tax Levy and Can It Be Stopped?

If you have a tax debt you're looking to eliminate before the IRS takes further action, find out what is a tax levy, and if it can be stopped.

21:59 19 August 2019

With over $83 million in back taxes in American according to the IRS, we can all agree there is a serious problem.

Getting behind on taxes doesn't happen overnight. It's one choice after another or overlooking how much you owe. When tax time comes, it can be overwhelming to see how much money you owe.

You may be asking, "What is a tax levy?" as you're looking over the huge tax bill in your hands.

Continue reading this article to learn what a tax levy is, how it works and if you can stop a tax levy.

The 411 - What Is a Tax Levy?

Dealing with tax levies on your own can be a scary process. Many people opt to find a tax attorney to help them navigate the waters but it helps to put your mind at ease when you have knowledge on the topic.

A Tax Levy Is --

A tax levy is when the IRS takes your property or assets to cover your tax bill. If you thought other creditors were ruthless -- the IRS can go far beyond what other creditors are allowed.

A tax levy happens when you've made an agreement to pay and you've failed to do so. A tax levy is a severe method of collecting what the IRS sees as their own. 

You aren't going to experience a tax levy out of the blue. You'll receive many letters before you come up against a tax levy and will know that it is coming.

When Should I Expect a Tax Levy?

If you're worried that you're going to be hit with a tax levy, there are some things you should know before you get too worried.

As we said above, the tax levy is a very severe method of tax debt collection. The IRS doesn't want to go through all of this trouble and they would much rather you pay the bill without going through all of this.

Before you experience a tax levy, you'll get demand to pay letters from the IRS, you'll have to fail to respond and negotiate with the IRS and the IRS will have sent a letter letting you know about the tax levy. You will have 30 days to appeal the tax levy.

The best thing you can do in these cases is to make sure you don't cut off communication with the IRS or you can be sure they will continue proceedings to levy your assets.

There are Exceptions to the 30-Day Levy Notice

Don't get too comfortable if you haven't gotten a 30-day levy notice. There are some exceptions and the IRS may levy your assets without notice.

If it looks like you're moving your funds out of the country so the IRS can't get their hands on them, they may levy your assets without notice. If you've had similar problems and requested a collection due appeal. And finally, if you have tax refunds, they can take the money without letting you know.

What Can the IRS Take?

When the IRS comes after your assets, it can be terrifying. You might be wondering if the IRS can come after your home, car and other day-to-day essentials.

Being worried that your lifestyle is in peril can cause unnecessary stress. Continue reading to see what property the IRS can take.

Wage Garnishment

The first course of action the IRS takes when they are trying to get their money back is getting in contact with the people that pay you. Any people or organizations that are paying you will have to divert monies to the IRS and out of your paycheck.

The money taken out of your paycheck is called IRS wage garnishment. IRS wage garnishment is the most common form of IRS levy. Don't worry about getting fired over the wage garnishment because it is illegal for your boss to fire you over getting your wages garnished.

The IRS will continue to garnish your wages until the debt is paid, you make other repayment arrangements or until the debt collection period expires.

Bank Levy

You might think the funds in your bank are safe but that's not the case. The IRS can contact your bank and request your bank account funds. In most cases, you'll have 21 days to make arrangements and get the levy off your bank account.

During the time that you're talking to the IRS about payment arrangements, the funds in your bank will be frozen so you won't be able to access them in any way.

Social Security Levy

The IRS can demand 15% of your payments from the Social Security Administration.

If a business or individual is paying an independent contractor, the IRS can demand they pay the money to the IRS instead of the contractor.

The IRS is allowed to contact anyone in your life to find out more about getting the money you owe them. 

Other Property the IRS Can Take

If you have homes, cars, real estate, boats or other valuable assets, the IRS can take them. The IRS doesn't like to deal with these things so it is rare that they go after them but know it is possible.

How to Stop an IRS Levy

If you want to stop an IRS levy, know that the IRS is not very forgiving. You'll need to negotiate repayment and there are options to put off the payments in case you are in serious financial trouble.

The best thing to do is to speak with a tax professional about your best course of action when you're up against a tax levy.

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