What You Need to Know About Federal Tax Levy
There are two primary methods that the IRS uses in order to collect tax debts from taxpayers: wage levies and bank account levies. Receiving notices for any of the two means that you are in serious trouble with the IRS. The IRS has the right to levy or garnish your wages when you owe them a certain amount of money. They can also garnish retirement income, social security benefits and any bonuses that you earn. Unlike many other creditors, the IRS, representing the government, actually doesn’t have to sue you in order for them to garnish your paycheck. They simply send 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 received a wage levy release, which frees 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 received by the contractors, this is significantl less than the normal checks they receive. The IRS publication 1494 is a useful resource regarding this matter. The second primary method that the IRS uses to collect debts is through bank account levies. This method allows the IRS to take all of your money in any of the bank accounts registered under your name. There is no use arguing with your bank as they will always say they have no choice and they can’t go against a government order. However, only funds that are in your bank account on the day the levy is delivered will be frozen by the banks. Hypothetically speaking, if the bank gets the levy notice on a Tuesday and you deposit a check on Friday, the IRS has no right to the money deposited on Friday except if they have another levy The law provides you a maximum of 21 days to get hold of a bank levy release from the IRS. If you cannot get one within the allotted period, the bank will immediately send your funds to the IRS. The amount of funds transferred to the IRS should be equal to the amount you owe but larger amounts will be collected if there are repeated bank account levies issued. Wage and bank account levies are just two of the collection methods used by the IRS. If worse comes to worse, they can also levy your personal belongings like jewelry, house, insurance policies and collectables. Hence, be sure to diligently pay all your taxes so the IRS will not enforce a tax levy on your income and your belongings. This article undoubtedly established the fact that a Federal tax levy is serious matter in all its aspects. Hence, before the government imposes more threatening collection methods, the likes of tax levies, taxpayers owing the IRS amounts of money must settle these dues now.
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