What is an IRS Tax Levy?
An IRS tax levy is a legal seizure of your property by a the Internal
Revenue Service in order to pay
an outstanding debt owed to the agency. An IRS tax
levy is but one method used by the IRS to collect unpaid taxes. If you
owe taxes to the IRS or a state taxing agency you may be at risk of receiving a tax levy. Although often confused, a tax levy is different from a tax lien. A tax lien is a claim to your property used as a security for the tax debt.
The thing that makes a levy such a feared IRS
collection tool is that it gives the IRS the right to seize several types of your financial assets including
wages, bank accounts, business accounts receivable and interest and dividend payments to name a
few. What's more, unlike a private creditor who has to go to court and
win a lawsuit to levy your assets, the IRS simply has to fill out a form, obtain a manager's signature and mail
out the levy.
As you can see, a levy or even the threat
of a levy is not to be taken lightly. The IRS does not send out levies
unannounced. They are required by law to give you 30 days notice sent by certified
mail. The IRS does this through Form CP90 Notice of Intent to Levy and
Notice of Your Right to a Hearing. Form CP91 is used to warn of intent
to levy Social Security benefits. You will be given 30 days to file an
appeal to the levy action. If you do so, you will be given a hearing
with an IRS Appeals or Settlement Officer where you will be given a chance to propose an alternative to the levy
for payment of the taxes.
The IRS levy is usually a tool of last resort for the
IRS. An IRS collector will only send out a levy when all of the prior
demand notices and communications have been ignored. Delinquent taxpayers
receive a series of collection notices before a CP90 final demand notice is even sent out. By the time a levy is received, it should be no surprise.
 All notices from the IRS are sent the taxpayer's last known address which is
usually the address used on the last tax return filed or change of address form sent to the
IRS. That is why it is of utmost importance to keep the IRS informed
of any address changes. Persons who owe back taxes, move around a
lot and are not current with their personal tax return filings often find themselves victims of an IRS levy as
all notices went to a prior address. In that case, the IRS did
nothing legally wrong as they used the last known address as required by law.
Most levies are sent to either a taxpayer's
employer to attach to wages or to the taxpayer's bank or both. If you are
receiving collection notices or a levy from the IRS you really have to have someone on your side who knows the
system and how to get the IRS to back off.
If feel that you would like assistance with either stopping or
releasing an IRS levy, then click the link below for a free consultation.
| 