There is not much more the Internal Revenue Service can do to unnerve a taxpayer than levy his or her property. A levy by the IRS permits it to legally seize the property of a taxpayer to satisfy a tax debt. The IRS may use a levy to garnish wages, take money in a financial account, as well as seize and sell real estate and other personal property.
Any taxpayer who receives correspondence from the IRS captioned Final Notice of Intent to Levy and Notice of Your Right to A Hearing, should not ignore this notice and contact an experienced tax professional immediately, in addition to contacting the IRS.
A federal tax lien is a legal claim against property, similar to a mortgage. However, a levy is a legal seizure that takes a taxpayer’s rights in property (such as a house or motor vehicle) or rights to property (such as wages, financial accounts, licenses, or Social Security payments) to satisfy a taxpayer’s unpaid tax obligation. There is no legal difference between a seizure and a levy.
The IRS will not seize property if a taxpayer has a current or pending installment agreement, Offer in Compromise, or if the IRS has agreed that the taxpayer is unable to pay due to economic hardship, defined as the taxpayer’s resulting inability to meet basic, reasonable living expenses.
Of course, the primary reason the IRS levies property or rights to property is that a taxpayer fails to pay, or make arrangements to pay, his or her taxes. The IRS will not seize property to collect an individually-shared tax responsibility.
The IRS typically levies or seizes property after the following events have occurred:
- The IRS assessed the tax and sent a bill for the tax to the responsible taxpayer;
- The taxpayer neglected or refused to pay the tax; and
- The IRS sent the taxpayer a Final Notice of Intent to Levy and Notice of Your Right to a Hearing at least 30 days before the seizure.
While taxpayers have a right to a hearing, some exceptions remove the requirement that the IRS offers a taxpayer a hearing at least 30 days before seizing his or her property. If the IRS serves a levy under one of the aforementioned exceptions, it will send the taxpayer a letter explaining the seizure and the taxpayer’s appeal rights after issuance of the levy.
These exceptions are as follows:
- The collection of the tax is in jeopardy,
- A levy is served to collect tax from a state tax refund,
- A levy is served to collect the tax debt of a federal contractor, or
- A Disqualified Employment Tax Levy (DETL) is served. A DETL is the seizure of unpaid employment taxes and can be served when a taxpayer previously requested a Collection Due Process appeal on employment taxes for other periods within the past 2 years.
IRS levies are potentially life-altering events since they may seize valuable property necessary for maintaining the amenities of a taxpayer’s everyday life. If your property is levied or your federal payments are seized, call The Gartzman Law Firm at (770) 939-7710.