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What Legal Grounds Does the IRS Have to Levy?
The Internal Revenue Code contains section 6331, which authorizes the IRS to levy in order to collect delinquent taxes.
What is the Difference Between a Levy & a Seizure?
None. They involve both the IRS’s taking of a taxpayer’s property in order to satisfy an unpaid amount. Tax Levies are used to take bank accounts, wages, other income, or other receivables. Seizures are used to take cars, houses, and business property.
What are the Different Types of Tax Levies?
There are two different types of tax levies. First there is the 668 (W). The 668 (W) is used to levy an individual’s wages, salary or other income. Other income is that owed to the taxpayer as the result of personal services in a work relationship. The 668 (A) is used to levy other property that a third party is holding. Other property included bank accounts and business receivables for self-employed people.
How Can a Tax Levy be Served?
A levy can be served by the IRS either by in person, by mail, or even by fax. All forms of service are as equally effective.
What is a Bank Tax Levy Holding Period?
A bank levy holding period is a 21 day period of time whereby a bank holds levied funds prior to releasing those funds to the IRS. The reason for the 21 day holding period is to allow the taxpayer to make a hardship argument to the IRS that may result in a release of some or all of the money that the IRS levy has attached to. After 21 days, if there is no levy release, then the proceeds that were in the bank account at the time the levy was received by the bank will be forwarded to the IRS. All money deposited in the bank account after the levy had been received by the bank will be available to for taxpayer’s use.
Can My Employer Fire Me Because I Got Levied By the IRS?
No, however, in practice it happens all the time. If an employer fires an employee because of an IRS wage levy, that employer is subject to a $1000 fine and possibly one year in prison.
Is a Wage Levy Continuous and Will it Apply to All My Income?
Yes. Unlike all other tax levies, a wage levy applies to all future income, commission and dispositions to an employee. A wage levy will apply to all of your income except the exempt amounts. The exemption amounts are so small that no one could possibly live off of them. Therefore, it is vital to negotiate a release of a wage levy almost immediately. One of the most expeditious ways to release a wage levy is to negotiate an installment arrangement or to declare bankruptcy.
Will the IRS Levy Retirement Accounts and Retirement Income?
Potentially, the answer is “yes,” however, the IRS must determine that the taxpayer’s actions are flagrant in order to merit a levy on retirement accounts and retirement income. Examples of flagrant conduct include the following: (1) taxpayers whose failure to pay is based on frivolous arguments (i.e. that taxes are unconstitutional); (2) taxpayers who continue to make voluntary contributions to retirement accounts while asserting an inability to pay an amount that is owed; (3) taxpayers who contributed to retirement accounts during the time period the taxpayer knew unpaid taxes were accruing; (4) taxpayers convicted of tax evasion; (5) taxpayers assessed with a fraudulent penalty; (6) taxpayers assisting others in evading tax; (7) taxpayers with liability based on illegal income; (8) taxpayers who are in business and pyramiding unpaid trust fund taxes; (9) taxpayers who have been assessed more than one civil penalty for more than one business organization; (10) taxpayers who have placed assets outside the country beyond the IRS’s jurisdiction; and (11) taxpayers who have been assessed jeopardy or termination assessments.
Tax Levies Are a Serious Matter
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