Stop or Release Your IRS Levy

An IRS levy is an action taken by the IRS to collect taxes. Levies are generally the result of non-communication between a taxpayer and the IRS, so always try to avoid a levy by keeping lines of communication open. By way of example, the IRS can issue a bank levy that takes the taxpayers cash from savings and checking accounts. It can also levy wages or accounts receivable. If the individual or organization served does not comply, they can experience grave IRS problems.

Bank Levies

If or when the IRS levies a bank account, the levy is only enforced for the particular day in which the bank received the levy notice. The bank is required to remove whatever amount is available in the person’s account, but ONLY on that particular day (up to the amount of the IRS levy). The bank then sends it to the IRS within 21 days unless notified by the IRS. This type of levy does not affect any future deposits placed into the bank account, unless the IRS issues another Bank Account Levy.

Wage Levy or Wage Garnishment

The difference between an IRS Wage Levy and Wage Garnishment is entirely different. A Wage Levi is filed with the taxpayer’s employer and remains until the IRS Wage levies are filed with the employer. They remain in effect until the IRS alerts the employer that the wage levy has been relieved. Generally, the wage levy takes so much money from the taxpayer’s paycheck, there is hardly enough money left for the taxpayer to survive.

Contact us today for a free no-obligation consultation on releasing your IRS Levy as well as stopping wage garnishments. Let us help you resolve your tax problems forever.

Frequently Asked Questions About IRS Levies and Wage Garnishments

What is a Levy?

A Levy is a seizure of property to satisfy a tax debt. The IRS obtains money from a taxpayer’s property after which ownership is transferred to the government. There are differences between a Levy and a Lien. A lien is a claim the IRS uses as security for the tax debt, whereas a levy takes property or wages to satisfy the debt. A levy on salary or wages is called a wage levy or wage garnishment.

What is a Lien?

A Lien is a claim registered against property for non-payment of assessed taxes. Although it is registered against property, a tax lien does not deprive a taxpayer of his or her property or the right to transfer property.

What will occur if a person does not pay taxes (or make arrangements to settle a debt)? If you do not pay your taxes or avoid making arrangements to settle a debt, the IRS can seize and sell your real estate or personal property. By way of illustration: The IRS can seize and sell your property, car, boat or house or it can levy property that is yours but held by another, which includes, wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables and even a cash loan value of a life insurance policy or earned commissions.

When Does the IRS Usually Levy?

The IRS will Levy when the following three situations occur:

The tax has been assessed and has been notified of a Demand for Payment.
The taxpayer refused or neglected to pay the tax.
A Final Notice of Intent to Levy as well as a Notice of Your Right to a Hearing has been sent by the IRS at least 30 days before the levy was issued.

If you have been assessed the IRS will either give notice in person or may leave the notice at your home or place of business. They may also send notice to your last known address by certified or registered mail along with a return receipt requested.

What is the Typical Amount Levied or Garnished by the IRS from a Taxpayer’s Paycheck?

Generally speaking, the amount levied or garnished is 30-70% of the gross paycheck, but the amount is based on a formula driven process.

Can a Levy Be Appealed?

A levy can be appealed. In fact, in many cases, Centsable Accounting, Inc. clients utilize our services to request a Collection Due Process hearing with the Office of Appeals. The grounds for a levy appeal covers the following:

All taxes owed have been paid prior to the IRS sending the levy notice.
If the IRS assessed the tax and sent the levy notice when the taxpayer was in bankruptcy, the levy is subject to an automatic stay during bankruptcy.
A procedural error on the part of the IRS was made during the assessment.
The statute of limitations (time to collect the tax) expired prior to the IRS sending the levy notice
No opportunity was afforded the taxpayer to dispute the assessed liability.
The taxpayer makes a request to discuss collection options
A spousal defense is made by the taxpayer.

What Occurs at the End of the Appeals Hearing?

When an appeals hearing concludes, the Office of Appeals issues a determination at which time the taxpayer is given 30 days to contest the determination. Should the taxpayer’s property be levied or seized, they should contact the IRS representative who took the action. The taxpayer may also request that a Manager review their case. If the taxpayer is still uncertain as to the unresolved matter, a Manager can explain the taxpayer’s right to appeal to the Office of Appeals.

At what point does an IRS levy of wages or a bank account levy end?

The levy on your wages, salary or federal payments by the IRS ends either when the levy is released or the taxpayer pays his or her tax debt. It may also end if the time for legally collecting the tax has expired.

How long must the bank hold funds on deposit if the IRS levies a bank account?

The bank must hold funds on deposit up to the amount owed, for a total of 21 days. This period allows for time to resolve any problems from the levy. But once the 21 days passes, the bank must send the money plus interest, if it applies, to the IRS.