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A levy is a legal seizure of your property to satisfy a tax debt. Levies are different from leies. A lien is a claim used as security for the tax debt, while a levy actually takes the property to satisfy the 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. For instance,
• The IRS could seize and sell property that you hold (such as your car, boat, or house), or
• The IRS could levy property that is yours but is held by someone else (such as your wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions).
The IRS will usually levy only after these three requirements are met:
• The IRS assessed the tax and sent you a Notice and Demand for Payment;
• You neglected or refused to pay the tax; and
• The IRS sent you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy. The IRS may give you this notice in person, leave it at your home or your usual place of business, or send it to your last known address by certified or registered mail, return receipt requested. Please note: If the IRS levies your state tax refund, you may receive a Notice of Levy on Your State Tax Refund, Notice of Your Right to Hearing after the levy.
The most common types of levies are wage garnishments and bank levies where the IRS will either garnish your wages through your employer or freeze your bank accounts. Once a levy has been initiated, you have 21 days to have the levy released or your property will be seized by the IRS. If the IRS is attempting to levy your property, we will review your individual situation and determine the best solution for you. Generally, when a levy is initiated, we will set up an installment plan, submit an Offer in Compromise or amend your tax returns to correct tax information.
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