IRS Levy - FAQ’s

Question: I have obtained a “Notice of Intent to Levy”, is this a levy?

Answer: No, a “Notice of Intent to Levy” is meant to get your attention and to let you know that the IRS will levy if unaddressed. Typically with a “Notice of Intent to Levy” you have 30 days from the date of the letter to contact the IRS to resolve the account before the IRS starts levying. An actual levy is sent to your employer, banking institute or other third party that actually seizes property to satisfy a tax debt.

Question: When is the IRS allowed to issue a levy?

Answer: To levy the IRS will usually 3 requirements must be met:
1. The tax liability was assessed against you.
2. You ignored or refused to pay the tax.
3. The IRS sent a Final Notice of Intent to Levy and Notice of Your Right Hearing at least 30 days before the levy. The IRS may leave it at your home, your place of business or send it to your last known address that the IRS has on file.

Question: What assets can the IRS levy?

Answer: The IRS can levy wages, bank accounts, property held by third parties, life insurance, Social Security income, 1099 income, accounts receivables, nearly any asset with few exceptions.

Question: What does it mean when the IRS sends a levy to my employer?

Answer: A wage levy sent to your employer is one that is continuous and stays attached to your paycheck until is has been released. The IRS will instruct your employer to send all monies due you from your pay checks, except your exemptions amount to the IRS.

Question: The IRS has taken all of the money out of my bank account, can they do that?

Answer: A bank levy seizes all the funds in your account up to the amount of the tax liability. It is a onetime levy. If the levy is not released within 21 days, the bank is required to send the funds to the IRS.

Question: Can a levy be removed?

Answer: Yes, a levy can be released.

Question: How is an IRS levy released?

Answer: An IRS levy can be released in the following ways;
1. Pay the full tax balance.
2. Enter into an installment agreement with the IRS.
3. Allow the statute of limitations to run out.
4. Prove the levy is a hardship. When considering a hardship the IRS adheres to very strict gudelines.
5. Set up a partial payment plan.
6. A successful Offer in Compromise.

Question: What is the difference between a levy and a lien?

Answer: A tax lien acts like a mortgage and will not be effective until you sell the property. A tax levy actually seizes the property to satisfy the tax debt.

Question: Can I avoid an IRS levy?

Answer: A tax levy can be avoided by paying the tax debt or making arrangements with the IRS. If you hope to avoid a levy, you must respond right away once a Notice of Intent to Levy has been received.

Question: When dealing with an IRS levy or levy notices, should I hire a tax professional?

Answer: When required to disclose financial information I always recommend professional representation. An experience profession will know how to work the tax laws to your advantage, what disclosures are legal and they can also usually expedite the levy release. They can go over the best options for solving to tax debt.