May 15, 2009

An IRS Levy

A levy is a legal seizure of your property to satisfy a tax debt. If you do not pay your taxes (or make arrangements to settle your debt), the IRS may seize and sell any type of real or personal property that you own or have an interest in. The IRS could levy your wages, you bank accounts, and in some extreme, rare cases could even seize property you own, such as your home.
The IRS generally only levies a taxpayer after other attempts to collect the tax have failed. If you are currently under levy, you have probably received several notices from the IRS informing you that you have a balance due and requesting payment. If you are not yet under levy, you should make an attempt to resolve your tax liability as soon as possible in order to prevent this type of collection activity from occurring.
The two most common types of levies are bank levies and wage levies.

A wage levy involves the IRS telling your employer to hold part of your pay and send it to them instead. The amount taken varies by case but, in most cases, leaves you with minimal income in order to meet your basic living expenses. When the IRS sends notice to your employer, they are required by law to comply. This type of levy will remain in place until an agreement is reached.

A bank levy, as the name suggests, is a seizure of money from an actual bank account. Like the wage levy, the IRS contacts your bank to inform them of the levy and the amount. This will freeze only the amount in you account at the time the bank receives the levy. Any funds deposited after your account has been levied will not be affected. After the bank receives the notice, the funds are frozen for 21 days before actually sent to the IRS by the bank. In this time the taxpayer can make arrangements to pay their tax debt, it may be possible to release the levy if this process is completed and appoved by the IRS before the 21 day period expires After the 21 days the money is gone and, generally, will not be returned.

The only effective way to avoid or release a levy is to get into an agreement with the IRS.

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