IRS Levy: What can you expect?

Last updated on July 18, 2021

Taxpayers who are under tax debt can expect to receive notice of levy from the IRS if they have been ignoring previous IRS notices regarding their tax debt. Under an IRS levy, the IRS can seize or sell the property or rights to property of a taxpayer to fulfil tax debt. The IRS has various types of tax levies that it can place upon a taxpayer.

IRS Levy: Wage Garnishment

The IRS can subtract a certain amount of funds from the wages of a taxpayer under tax debt to fulfil a tax debt. The IRS communicates with the employer of the taxpayer to collect funds from the wages. Taxpayers have no say in how much the IRS subtracts from their wages.

IRS Levy: Bank Levy

In many cases, the IRS chooses to levy the bank account(s) of taxpayers who ignore paying their tax debt. Under a bank levy, the IRS seizes the bank account(s) of a taxpayer and recovers funds that are required to fulfil the tax debt. The IRS may seize more than one bank. The bank is required to hold funds for 21 days to resolve any ownership disputes before transferring the funds to the IRS.

IRS Levy: Seizure of Property

The IRS prefers to place a levy on wages or bank accounts instead of seizing the property of a taxpayer to recover tax money. If the IRS decides to levy property, they may seize and sell the residence, car(s), boat or anything other asset of a taxpayer to fulfil tax debt.

Apart from property, the IRS can also levy rights to property such as social security, retirement funds etc. Taxpayers are advised to take action to resolve their tax debt as early as possible to avoid an IRS levy. It is in their best interests to pay back taxes instead of facing the financial crisis that a levy brings.