No one likes getting mail from the IRS, but receiving a notice of a tax levy can be incredibly alarming. You may not have known that you owed so much in back taxes, or perhaps you’ve been working on a solution for a while but just haven’t had enough time to make the necessary tax payments.
Before taking action with the tax levy notice, ensure you fully understand what it does, the potential consequences, and how to resolve your tax liability.
What Is a Tax Levy?
A tax levy occurs when the government seizes your property to pay your tax debt. By the time you receive a tax levy notice, you’ve probably already received several other notices alerting you to your tax liability.
Once the tax levy takes effect, the IRS will send government officials to seize your property in an equivalent amount to the unpaid taxes you owe. The government can sell this property and use the proceeds to pay your tax debt.
Note the difference between a tax levy and a tax lien. A tax lien is a claim against your property, while a tax levy follows through on that claim by seizing your assets.
Types of Tax Levies
The IRS can claim a wide range of assets and personal property to pay your tax debts. A few common types of tax levies include:
- Asset levies, in which the government takes your house, car, and/or other significant assets, then sells them to pay down your tax bill.
- Wage levies, in which the IRS garnishes your wages until you have paid your tax bill. You’ll likely still receive a portion of your typical wages during this time.
- Account levies, requesting that your financial institution transfers money from your accounts to pay your federal taxes.
The IRS may apply a combination of the above levies to repay your tax debt. Never underestimate the lengths the IRS will go to settle your tax liability — the agency is much more aggressive than the typical lender or collections agency.
Ways To Get a Tax Levy Released
By the time you receive a notice of a tax levy, you’ve already had several opportunities to repay your tax debt. It’s not too late to get your tax levy released, but you’ll want to act quickly if you can prevent the IRS from seizing your property.
You can remove a tax levy through a few different tax resolution options:
- Pay your tax debt. If you have the funds or can borrow from a friend, lender, or retirement account, pay your bill as soon as possible to release the levy.
- File an appeal. If you believe the IRS implemented the tax levy in error, you can file an appeal with the help of a tax levy attorney.
- Apply for the IRS Fresh Start Program. The IRS offers several initiatives to help taxpayers resolve their tax debt. You may be able to pay your debt in installments, settle your debt for a lesser amount, or delay your tax bill until you are in better financial standing.
- File for bankruptcy. Bankruptcy is a last resort for consumers in overwhelming debt. It will hurt your credit and financial opportunities for years, but it can effectively remove your tax debt.
Need Help Navigating a Tax Levy?
Tax levies can be scary, and you may be unsure how to proceed. At Levy & Associates, Inc., we provide professional guidance for consumers navigating tax levies and other tax-related issues.
Call 800-TAX-LEVY today to speak with a tax levy attorney.