A levy is the seizure of your property to pay a tax debt. If you receive notice that you are subject to an IRS Levy due to back taxes, this is a problem that can be resolved.
Before seizing your property, the IRS will send you a notice giving you 30 days to respond. According to the IRS, if you don’t respond and make payment arrangements they can levy your assets, your income, and your social security benefits.
The IRS has two methods to levy social security benefits. In an Automated Federal Payment Levy Program, the IRS can take up to 15 percent of your benefits each month until the debt is paid in full. Under the Manual levy, there is no cap on the amount they can take. They do, however, say that they “take into account money for reasonable living expenses”. The IRS will not levy children’s benefits, SSI, or lump sum death benefits.Best Tax Relief Companies
The IRS can also levy your bank account. Any account with your name on it is subject to levy, even joint accounts. Once your bank receives a Notice of Intent to Levy, the bank will freeze all of your checking, savings, CDs, and any other accounts in your name. The bank holds the funds for 21 days, giving you time to work out a payment arrangement with the IRS. After the money is turned over to the IRS, you won’t be able to get it back even if you later work out an agreement. Only the funds on deposit at the time of the levy are affected. Money deposited afterwards, such as if your paycheck is directly deposited, is not subject to the levy.
If the IRS levies your paycheck, it is immediate and it will continue until the debt is paid. Typically called a wage garnishment, your employer will send a portion of your pay to the IRS each pay day. Some of your pay will be exempt; the amount depends on your filing status and number of exemptions you claim.