IRS Actions for Tax Debt and Non-Compliance

Last updated on October 28, 2023

The IRS does not require permission from the court to levy a taxpayer’s assets and income if back taxes are owed. However, the agency is required to follow certain procedures when executing seizures. Before placing a levy, the IRS must inform the individual about the tax debt. They are also required to inform the taxpayer through a notice of their intent to levy – and what he or she can do to avoid it.

If the taxpayer is not informed about the tax debt and the IRS places a levy, then the taxpayer can challenge the action in court. Taxpayers must ensure that they maintain accurate information with the post office so they receive any notices the IRS sends regarding tax debt.

The IRS has also been known to seize funds from taxpayers that have not been charged with any serious crime. In a recent case, a small business owner lost $33,000 of her savings to the IRS after challenging the woman’s bank deposit amounts. In this instance, the IRS relied on a law that was designed to prevent and stop tax evasion and money trafficking.

Even though the IRS clarifies that making deposits less than $10,000 at a time is considered an attempt at tax evasion, they can easily base their judgment on a taxpayer’s circumstances and past records. If a taxpayer has been running a legitimate small business, or is at a job for years without any previous charges of breaking the law, the IRS can make a reasonable determination as to whether or not the individual intended to evade paying taxes.