If you owe a tax debt, you can have a lien placed against your property. If you don't pay the debt or make arrangements to pay it, then a levy is carried out. A levy is the actual seizure of the property so it can be sold to pay the debt. A levy isn't just carried out against your personal property like a car, house or other real estate, but bank accounts, wages, state tax refunds and other income can be levied to pay a debt as well. Any kind of income or property like retirement benefits, insurance policies that can be cashed out, and accounts receivable in the case of a business, can be levied.
Requirements for a Levy
There are three requirements that must be met before the IRS can levy your property.
- You were sent a Notice and Demand for Payment
- You didn't pay those taxes after receiving that notice
- You were sent notices about your right to a hearing and their intent to levy 30 days before the levy
Once those conditions are met, your property can be levied to pay your tax bill.
What You Can Do
If your receive a levy notice, you can file a request within 30 days to have your case reviewed. If you paid the tax before the notice, the levy notice was sent while you were in bankruptcy or there appears to be an error, you shouldn't hesitate to discuss your case with an IRS agent. Other situations that cause a withdrawal of the levy are if the statute of limitations on collecting the tax bill has run out, or you're ready to make payment arrangements.
Levied Income
In cases where the levy isn't against your personal property but your income, the levy will be released after the debt is paid or the statute of limitations runs out. You'll have 21 days to resolve any disputed with a bank account levy, because the bank is required to hold funds for that period of time before releasing them to anyone.
A knowledgeable attorney can be your greatest asset after you receive a levy notice. He or she can help you negotiate a repayment plan during the 30-day window after you're made aware of their intent to levy your property, or during the 3 weeks in which your bank account is held for funds you owe.
