Information about the Federal Tax Levy

There are two primary procedures that the IRS uses in order to collect tax debts from taxpayers: wage levies and bank account levies. No matter which technique the IRS chooses to implement, both indicate that you have a very serious IRS problem.

The IRS has the right to levy or garnish your wages when you owe them a certain amount of money. Other sources of income such as retirement income, social security benefits and bonuses may also be garnished. It is imperative to remember that the IRS is not the same as other creditors as the former can immediately garnish your wages without having to sue you. They simply deliver a notification or serve the wage garnishment to the company you work for and tell them that they are now required to transfer a considerable amount of your paycheck to the IRS instead of you directly. They are ordered to do this until your tax debt is eventually paid off or until you have obtained a wage levy release, which liberates you from this particular IRS problem.

In the case of independent contractors and the self-employed, the IRS can actually, in fact obligate the clients to pay a certain amount of money to them. Although some amount will still be given to the contractors, this is substantially less than the normal checks they receive. The IRS Publication 1494 contains all the answers to any questions regarding this matter.

The IRS may also issue a bank account levy and this allows them to take all of the money in any of the bank accounts under your name. Because this is a government mandate, the banks will comply with this notice and it would be useless to argue with them. Recognize, however, that the IRS can only take the funds that are in your bank account the day the levy is received. For example, if you deposit a check on Friday and the bank got a levy notice on Tuesday, only funds present on Tuesday will be given to the IRS. Funds from Wednesday to Friday can only be garnished when another levy is issued.

You are provided with 21 days to get a levy release if the IRS imposes a bank account levy on you. If no effort is exerted to get a levy release, the bank will automatically send your funds to the IRS. They may transfer up to the actual amount that is owed from the IRS. The Internal Revenue Service can also take more money from any of your accounts by simply issuing other bank levies.

Wage and bank account levies are only two of the collection methods used by the IRS. In rare cases, they can also levy your personal belongings like jewelry, house, insurance policies and collectables. To avoid getting to this point, pay the IRS what you owe them as a tax levy is a serious IRS problem that doesn’t simply go away.

As vividly pointed out in this write-up, a Federal tax levy is a serious issue in all respects. Thus, it is imperative for people who have tax debts to settle them promptly and not wait for the government to impose more threatening collection techniques like tax levies.