IRS Tax Levy and Your Rights

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. A levy by the IRS carries the most penalties and also the widest range of collection possibilities under current law. 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. This is scary stuff to the average taxpayer and being prepared for what is coming will help to alleviate many of these fears.

If you have been notified of delinquent taxes and still have refused or been unable to pay them, a tax lien will be placed against your property first. 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. This type of tax levy is often confiscatory and can cause immeasurable financial damage to you.

The wage garnishment is often followed by freezing of your bank accounts, retirement accounts, trusts as they are released, social security payments and any other liquid assets that you may have. 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. Once the procedure has started it is difficult to stop the IRS from taking what they want until the debt is satisfied.

A few people when they find themselves in this position can wait it out and then go about their lives. However, most of us would be devastated by the reduction in liquid income coming into our households. 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. Being unable to pay a tax bill in full does not mean you cannot make payments or attempt to negotiate a settlement.

Employing a tax professional may seem expensive at the time but if your IRS levy is such that your home and other property is in danger then the cost should be miniscule in comparison. An IRS 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.