What You Need to Know About Federal Tax Levy
Wage levies and bank account levies are two of the prime methods that the IRS uses for tax debt collection. Receiving notices for any of the two implies that you are in serious trouble with the IRS.
When you incur tax debts, the IRS can levy your wages, including your retirement income, social security benefits and other bonuses that you may have earned. In fact, the IRS can automatically garnish your paycheck without having to go through a trial. All they have to do is simply send your employer a notification and the latter is then immediately required to transfer a substantial amount of your paycheck to the IRS. Full payment of total taxes due and a levy release are your only alternatives in ending wage garnishment.
If you are an independent contractor or self-employed, then anyone who contractually pays you income will be obligated to pay that money to the IRS instead. Although you will still receive money from your clients, the amount will be substantially less than the normal. If you have inquiries regarding the exact amounts, you may want to look up IRS Publication 1494.
The second primary method that the IRS utilizes to collect debts is through bank account levies. In this method, the IRS can automatically claim all of the money held in any bank account, such as checking or savings, under your name. Banks will always comply with the IRS, so there is no sense arguing with your bank as they will always say that their hands are tied and cannot do anything about a the government order. However, the bank will only forward to the IRS funds that are on the account the day that the levy is received. Hypothetically speaking, if the bank gets the levy notice on a Tuesday and you deposit a check on Friday, the IRS has no right to the money deposited on Friday unless they have another levy
When the IRS has a bank account levy on you, you are given 21 days to convince the IRS to discharge the levy. If for some reason you cannot obtain the levy release or you simply do nothing, the bank will send the funds frozen in your account to the IRS. They will send up to the actual amount that you owe the IRS. The Internal Revenue Service can also take more money from any of your accounts by simply issuing repeated bank levies.
Aside from a wage levy or bank account levy, the government also has a few other methods that are less used but definitely just as efficient at collecting debt. They can actually levy personal assets like jewelry, your home, collectables, boats, personal property, insurance policies, ATVs, accounts receivables, and even airplanes. With this, it is important to take note that any tax levy would indicate an IRS problem that simply does not go away unless addressed squarely.
As vividly pointed out in this article, a Federal tax levy is a serious issue in all respects. Thus, before the government imposes more serious collection procedures, the likes of tax levies, taxpayers owing the IRS amounts of money should pay off these dues now.
Filed under Blog by on Oct 10th, 2009. 
