Posted on Fri, Mar 30, 2012 @ 12:16 PM
When you have an income tax debt, there are several steps that the IRS can legally take to collect the money you owe. These include:
- Garnishing your wages, which involves seizing a percentage of your paychecks directly from your employer before you receive the check.
- Placing a tax lien on your personal property, such as real estate or vehicles.
- Freezing your bank accounts and taking the funds to apply to your tax debt.
Of these consequences, seizing your bank accounts are typically the most serious.
Notification of an account freeze
The IRS is required to give notice before they take this action. You will receive a final notice before a bank levy is issued. Failure to respond to this notice will result in a levy, at which point you will have a maximum of 21 days before the bank must turn the funds over to the IRS.
Which assets can the IRS claim?
Wage garnishment cannot exceed a certain percentage. However, if the IRS places a freeze on your checking, savings, or other bank account, they can remove all the funds that are in the account at the time of the freeze, up to what is owed. In order to collect further deposits to the account, the IRS would have to initiate the freezing process again.
Retirement funds are also fair game for the IRS, including social security payments and any other form of a pension. In addition, a tax lien placed against your property can allow the IRS to force the sale of real estate or other property, and collect funds from the sale to satisfy your debt.
What to do if a Levy is initiated
When the IRS announces an intention to levy your assets, the most important thing is to NOT ignore the notice. If you do nothing, you will lose your money. However, the good news is that the IRS wants to collect the full amount owed, and is typically willing to work out a payment arrangement.
If you receive notice, it's a good idea to consult with a tax resolution specialist regarding your options. Depending on the amount of taxes you owe, you may be eligible for an installment agreement, an Offer in Compromise or possibly be decalred currently not collectible. A tax resolution firm can help you get the best settlement possible with the IRS, without draining your bank accounts.
If you are facing a Levy and want help from the best, click on the form to the right or call 88-411-5389 (LEVY) and someone from our A+ BBB Rated staff will contact you immediately.
Remember, "YOU WANT A LEVY ON YOUR SIDE, NOT ONE AGAINST YOU"