IRS Tax Levy: What It Means to You

A tax levy can come from any form and level of government which has the authority to impose a tax, whether it is city, county, state or federal government but the most feared of these is the IRS tax levy. It carries the most weight and provides the government with the most power to  pursue the collection of the tax debt. Many times a tax levy from a local entity can only encumber a single particular asset but a federal tax levy can be placed against any and all assets that you own as well as end up with federal prison time if not paid. Most taxpayers are scared to death of being brought under an IRS tax levy and while it is scary, you can defend yourself and your property. 

An IRS tax levy comes about when you have been notified of unpaid tax liability and have refused or failed to comply with the payment or attempted to make payments. Once a lien is in place a tax levy takes over and under it the levy your property can be seized in an effort to settle the tax debt. The most common form of tax levy is the IRS Garnishment of your wages. Employers are notified that you have a past due tax bill and must submit to the requirements of the levy or be held liable for the amount the IRS garnishment would have collected from your wages. Often times this will be confiscatory in nature if not complete withholding of your entire paycheck. 

Garnishing your wages is just the first step as bank accounts, retirement accounts, investments, businesses, property and finally your social security payments can be seized until the lien is satisfied. Once the easy steps have been taken, other steps to seize and pay off your debts will begin to occur against real property, art, jewelry, boats and cars. Unless you act early, it is difficult to stop the IRS from taking what they want until your tax debt is paid. 

Some people are able to weather seizure of wages without too much difficulty. Others may find themselves unable to satisfy the tax levy simply because they do not have the means to pay it. However, the worst thing you can do is to do nothing. By showing that you want to pay the debt you may be able to negotiate a settlement or reduce your debt to livable payments. Just because you cannot make the full payment does not mean you can not find a suitable alternative which may include a reduction in the amount that you owe.

Tax professionals who handle ample Tax levy may seem costly but in the long run they may save you many thousands of dollars and your property. A tax levy can be frightening, but you have the right to representation as well as the right to negotiate a settlement under current tax law. Take the time to understand what is happening before you decide to do nothing.

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