IRS Tax Levy

What Is a Tax Levy?

A tax levy is a legal seizure of your assets or property to repay or satisfy an unpaid tax liability. While traditional levies require a collection agency to obtain a court order to move forward with a levy, the IRS can authorize levies to collect delinquent tax balances.

Any property or asset can be levied to fulfill an unpaid tax debt, including your house, vehicles, bank accounts, wages through wage garnishment, retirement accounts, rental income, accounts receivables, reduced tax refunds, the cash loan value of a life insurance policy, real property, and other assets.

Are Taxes Owed to the Internal Revenue Service? We Can Help

The IRS can levy many types of property or assets to satisfy unpaid tax debt. This includes homes, vehicles, bank accounts, wages, retirement accounts, rental income, the cash loan value of a life insurance policy, or any other asset.

The IRS has broad authority to seize certain property a taxpayer owns, auction it, and keep the proceeds as part of the tax levy process. Additionally, the IRS can keep any federal tax refunds that would otherwise be refunded to a taxpayer if they have unpaid taxes.

How is a Federal Tax Lien Different from a Tax Levy?

A tax lien and a levy are tools the IRS uses to collect outstanding tax debt and address taxes owed, but they work differently. A tax lien is a legal claim against your property when a tax debt remains unpaid, protecting the government’s interest in your assets, such as your home, vehicle, or other property, until the debt is paid. It does not involve taking your property; it simply establishes the IRS’s right to it. A tax levy, however, is the actual seizure of property to satisfy the tax debt, allowing the IRS to take funds from your bank account, garnish wages, or seize and sell assets like real estate or vehicles.

What Property Is Exempt From a Tax Levy?

The IRS cannot seize all of your property and income through a tax levy, as federal law protects certain essential assets to ensure you can maintain basic living standards under provisions outlined in the Internal Revenue Code. This includes leaving you with enough income to provide necessities for yourself and your dependents. The exempt amount is a legally protected portion of your wages that cannot be levied, ensuring employees retain enough income to avoid economic hardship.

Some key items exempt from a tax levy include:

• Essential clothing

• Household furniture and appliances

• School books

• Necessary tools for your trade or profession

• Unemployment benefits

• Certain annuity and pension payments

• Judgments granting child support for minor children

When Will the Internal Revenue Service Issue a Levy?

For the IRS to issue a levy, three requirements must be satisfied.

1. The IRS sent you at least one (1) Notice and Demand for Payment.

2. The taxpayer has neglected or refused to pay the tax bill

3. The IRS sends you a Final Notice of Intent to Levy and Notice of Your Right To A Hearing (LT11 or LT1058) with a thirty (30) day deadline.

The IRS generally determines whether to proceed based on the taxpayer's overall compliance status and the amount of unpaid taxes remaining after the notice period expires. The IRS may notify you of its intent to levy in several ways, including serving you the notice in person, leaving it at your home or place of employment, or sending it to your last known address through certified or registered mail. You may also receive notices like CP504, CP504B, or CP90.

A levy ends when you have fully repaid your federal tax balance, the statute of limitations has ended, or you have the levy removed. If the tax levy creates a financial hardship, you can apply to have it removed and seek other tax relief solutions.

Beware of Tax Levy Scams

The IRS will not send you an intent to levy via phone call, email, or SMS message. If you receive notice that the IRS is threatening to place a levy on your assets through any of these mediums, it is most likely a scam or IRS impersonation, and we recommend reporting it to the FTC immediately.

Learn more about common IRS scams and red flags here.

How to Remove a Tax Levy

If the IRS has placed an active levy on you, you have the right to appeal and have the levy released. However, your appeal can be denied at any time, so relying on a tax professional is highly recommended for the best possible outcome.

Other qualifications to have the tax levy removed include:

• The amount owed has been paid in full.

• The period for collection ended before the IRS issued the levy.

• The release of the levy would allow the taxpayer to pay their tax liability.

• The taxpayer entered into a Fresh Start Initiative program, and the terms of the agreement do not allow the levy to continue.

• The levy creates an economic hardship for the taxpayer.

• Releasing the levy will not hinder the IRS’s ability to collect the amount owed.

If you feel that you already meet one or more of these requirements or believe that the IRS issued a levy in error, you may appeal your case to release it.

Do I Need a Professional to Remove a Tax Levy?

Taxpayers are not legally obligated to hire a representative to release a tax levy. However, because tax levies are only applied to a case that has been severely delinquent with the IRS, it is strongly advised to consult with a trusted tax professional when attempting to release or appeal a levy.

The IRS’s ability to release a levy is at its discretion, and levy resolution often requires an expertly built and presented case. While the IRS must comply with many guidelines when considering the release of a tax levy, it is ultimately the taxpayer’s responsibility to accurately present their case.

How to Get Professional Tax Levy Removal Services

The first step to getting professional help with a tax levy is scheduling a free consultation with a qualified tax resolution firm, such as TaxRise. This initial review allows you to review your situation and discuss potential options to get to an IRS tax resolution. When choosing a company, focus on those with a strong reputation, verified client reviews, and experience handling IRS matters. Working with a trusted firm can help you better understand your options and guide you towards the right resolution based on your individual circumstances, while providing reliable guidance throughout the process.

What Companies Help With Tax Levy Removal?

TaxRise is a tax resolution firm that assists with tax levy issues. Our team of tax professionals is here to provide expert assistance with your tax debt situation and help guide towards a path that fits your financial situation.

If you’re facing an IRS tax levy, it’s time to take immediate action. The sooner you address your tax liability, the more options you’ll have available and the faster you can regain financial stability. Schedule a free consultation today to take the first step toward resolving what the IRS claims you owe.