Under United States Federal Law, a tax levy is an action taken by the Internal Revenue Service (IRS) to seize funds or property to satisfy an outstanding tax liability. United States Code (USC), Title 26 Internal Revenue Code (IRC), Subtitle F, Chapter 64, Subchapter D, Part II, Section 6331 authorizes levies to collect delinquent tax.
Any property or right to property that belongs to the taxpayer, or on which there is a Federal tax lien, can be levied unless the IRC exempts the property from levy.
Actions the IRS Must Take Before Issuing a Levy
Usually, the IRS will only levy after these four requirements are met:
- The IRS assessed the tax and sent you a Notice and Demand for Payment (a tax bill);
- 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 IRS sent you advance notification of Third Party Contact notifying you that IRS may contact third parties regarding the determination or collection of your tax liability.
Type of property That Can Be Seized With a Tax Levy
If you do not pay your taxes or make arrangements to settle your debt, the IRS may levy any property or right to property you own or have interest in.
The IRS can seize or sell property that you hold, such as
- Your home
- Your house
- Your boat
The IRS can also levy property that is yours but held by someone else, such as:
- Your Wages
- Retirement Accounts
- Bank Accounts
- Rental Property Income
- Accounts Receivables
- Cash Loan Value of Your Life Insurance
How Rockwater Associates Can Help
Rockwater Associates has successfully helped thousands of people just like you overcome tax debt, small or large. With decades of experience working with the IRS and every State, we are your best hope of reaching a better deal. Almost everything is negotiable, including back taxes.
Don’t ignore any IRS notices you receive, especially those regarding a tax levy.
Failure to act is the worst possible response when you owe money to the IRS. Don’t think they will forget about you if you keep quiet.
If you choose to partner with Rockwater Associates, you will be working with some of the industry’s brightest and most experienced professionals. Our communication, honesty, and transparency in our processes make us the right choice to provide a solution to your tax levy problem. Our number one priority is providing you with a great customer experience.
If you are experiencing a tax levy problem, Rockwater Associates can help you with, for example, Bank and Accounts Receivable Releases. We work quickly to release the bank levy against your account.
Let a Trusted Partner Help You.
Tax Levy FAQs
You can avoid a tax levy by filing returns on time and paying your taxes when due. If you cannot pay what you owe, pay what you can and then contact the IRS to resolve the remaining balance.
Don’t ignore IRS notices, even if you think there is an error or feel you do not owe the tax. If you do not contact the IRS and work with them to resolve the tax debt, the IRS may levy your property.
If a levy has already been issued, contact the IRS right away. Call the number on your billing notice or individuals may contact the IRS at 1-800-829-1040. Businesses may contact the IRS at 1-800-829-4933.
To get a levy released, you need to contact the IRS right away to request a levy release.
The IRS is required to release a levy if it determines that:
- You paid the amount you owe,
- The period for collection ended prior to the levy being issued,
- Releasing the levy will help you pay your taxes,
- You enter into an Installment Agreement, and the terms of the agreement don’t allow for the levy to continue,
- The levy creates an economic hardship, meaning the IRS has determined the levy prevents you from meeting basic, reasonable living expenses, or
- The value of the property is more than the amount owed, and releasing the levy will not hinder the IRS from collecting the amount owed.
Note: The release of a levy does not mean you don’t have to pay the balance due. You must still make arrangements with the IRS to resolve your tax debt, or a levy may be reissued.
If the IRS denies your request to release the levy, you may appeal this decision. You may actually appeal the decision before or after the IRS places a levy on your wages, bank account, or other property.
If levy proceeds have already been sent to the IRS, you may file a claim to have them returned to you. Additionally, you may also appeal the IRS’s denial of your request to have levied property returned to you.
If the levy is causing a hardship, contact the IRS at the telephone number on the levy or correspondence right away to explain your financial circumstances.
The IRS will release the levy on your wages, bank, or other account if the levy is causing immediate economic hardship.
An economic hardship, as defined by the IRS, “occurs when we have determined the levy prevents you from meeting basic, reasonable living expenses. In order for the IRS to determine if a levy is causing hardship, the IRS will need you to provide financial information, so be prepared to provide it when you call. “
Remember that when a levy is released, that does not mean you are exempt from paying the balance. Work with the IRS to establish a payment plan or take other steps to help you pay off the balance.
When calling the IRS, have the fax number available for the employer, bank, or other financial institution to ensure quick action.
A lien is a legal claim against property to secure payment of the tax debt, while a levy takes the property to satisfy the tax debt.