An IRS levy is an order from the Internal Revenue Security
directing TVA to withhold a specified amount of an employee's
pay to satisfy a tax debt. If the IRS determines that we owe
back tax then it may issue an IRS levy requiring the deductions
from the pay till the back taxes are paid. They may ask the
person to sign an agreement of consent authorizing the amount to
be deducted. The IRS levy can allow an amount to be exempt from
withholding based on the o employee's tax filing station and the
number of exemptions claimed.
A legal step taken by Internal Revenue System to seize anyone's
property in order to satisfy his debt is IRS levy. They are
different from liens. Lien is just a claim used as security for
tax debt whereas in IRS levy they actually take the property to
do so. If one cannot make arrangements to settle the debts then
the IRS seizes or sells any type of personal or real property
which one possesses. For example, the IRS can seize and sell
property like boats, houses, cars, etc. Even they can levy
property that is actually the debtors' but is help by someone
else like the wages wit the employee, balance at the bank
account, license, rental income, etc.
An IRS levy is issued only when he requirements are met. The
first condition is when IRS sends a notice or demand for the
payment of the tax assessed by them. Secondly, when the person
refuses or neglects to pay the tax and lastly when a final
notice of Intent to Levy i.e. a legal notice of IRS levy is sent
30 days before the levy. A person receives one more notice with
this notice known as Notice of Your Rights to Hearing. These
notices can be given anywhere at our business place, at home or
can be registered with the return receipt.
One may ask the IRS to review the case or can even request to
Office of Appeals by filing a request to the IRS officer listed
in our notice. This request filing should be done within 30 days
of the receipt of the IRS levy notice.
When the IRS levy, levy our wages, salary or bank account, the
levy ends when it is released or when on e pays the tax debt or
at the expiry of the time of legal collection of tax. When the
IRS levy, levies the bank account, the bank holds the funds in
deposit for 21 days. This time is given as the relaxation period
to solve the problem at hand. After 21 days, the bank sends the
money to the IRS along with the interest, if applicable, to the
IRS.
If IRS makes any mistake, like while levying bank account, the
bank charges are borne by the debtor. In such a condition one is
entitled to have the reimbursement for such charges. For this
reimbursement one has to file a claim to the IRS within one year
after the bank has claimed the charges.
There are two different types of IRS levy programs. One is FPLP
i.e. Federal Payment Levy program and the other is SITLP, which
is State Income Tax Levy Program. Under the FPLP, the IRS may
levy money from the federal payments received like Social
Security benefits, retirement from the Office of Personnel
Management, federal employee's salaries, etc. FPLP electronic
levies the federal payments made through Department of Treasury,
Financial Management services. When these agencies levy through
FPLP, they take 15% from each of the payments till the account
is resolved. One can call IRS employee for assistance if he is
already working with them.
Under the SITLP, IR levies the state tax refund. This implies to
individual state tax refunds only. Inclusion of business tax
refunds in the future is under consideration. If the state tax
refund is levied, the state issues a notice of advice about the
levy. If one receives an advice, legally, for the Rights of
Hearing then this IRS notice of advising is not issued.
About the author:
Henry Byers, Retired IRS Manager and
IRS Tax Levy expert -
focusing on
Garnishment Laws and
IRS Levy
