taxrates logo   

Home

The Definition of an IRS Levy

Definition

The IRS notes that a levy is the legal apprehension of the debtor's property to fulfill a tax debt. While a tax lien uses the property as collateral to satisfy the debt, a levy actually seizes the property. The IRS can take and sell the debtor's property, such as his car and home. In addition, it can levy assets that he owes but is held by someone else, such as his bank account, wages, federal and state tax refund, pension accounts, commissions and accounts receivables.

Criteria

The IRS imposes a levy after it has assessed the amount owed, including penalties and interest; sent the debtor a bill for the amount owed; the debtor does not pay the bill; and sent the debtor a levy notice. It can give the debtor the levy notice in person, leave it at her workplace or home, or forward it to her last known address by registered or certified mail.

Appeal

If the debtor has concerns about the levy, he can ask an IRS manager to evaluate his case. Or, he can file an appeal with the IRS Office of Appeals and request a Collection Due Process hearing. He must file the appeal within 30 days of the levy notice date. He can discuss the following issues in his appeal: he paid the monies owed before the IRS sent the levy notice, he does not agree with the IRS' assessment, he would like to discuss payment arrangement options, or the statute of limitations expired before the IRS sent the levy notice.

Compliance

If the IRS levies the debtor's wages or her bank account, her employer and financial institution, respectively, must adhere to the levy. The employer must use the IRS' Publication 1494 to determine the amount of wages exempt from the levy. The bank must hold monies, up to all that is owed, for 21 days. Thereafter, the bank forwards the monies to the IRS. Failure to comply with an IRS levy can result in the employer or the bank being held liable for the funds that should have been collected.

Termination

The levy ends when the IRS releases the levy, the tax debt has been satisfied, or the statute of limitations have expired--10 years after the levy assessment date.

Solution

To avoid a levy, the debtor should not ignore the notices the IRS sends him. The IRS imposes the levy only after he has not complied with its demands. Furthermore, the IRS has different payment plans available to suit the taxpayer's financial situation. This includes an installment plan, or placing him in "Uncollectible Status," which temporarily stops collection activity if he is undergoing acute hardship.

Visitors Also Saw
  • How to Amend a Colorado State Tax Return
  • Tax Tips and Discounts
  • How to Check the Status of My Tax Return in Canada
  • Michigan 1040X Instructions
  • How Are Stock Market Losses Treated for Tax Purposes?
  • Tax Relief for the Elderly
  • How to Deduct & Calculate VAT
  • How to Protect IRA Withdrawals From Taxes
  • How to Complete a 1040X With Form 5405
  • How to File for an Extension for California State Income Taxes



  • I. American Stores Tax Rates Search


    II. American Stores Shoping Guide