Get your free copy of the Top 10 things you need to know about an IRS Levy!

Who does IRS target to levy?

Last year the Internal Revenue Service sent out 2,631,038 Levy Notices and by all accounts that number is expected to be much higher in the future. Call us if IRS has levied you, 1.866.700.1040

IRS will levy a taxpayer that owes the them delinquent or back taxes. The IRS will notify a taxpayer that it intends to levy their wages and/or their bank account. The final notice sent out by the IRS is a Form 504, Notice of Intent to Levy, this is usually sent by certified mail. In some cases the taxpayer does not receive any of the notices, this may be because the taxpayer has moved. Regardless of whether or not you have received a notice, the IRS will levy on the date specified in the notice. Should you receive a notice contact Fresh Start Tax immediately. Our tax professionals can stop the levy in most cases.

Who does IRS send tax levies to?

IRS Notices of Tax Levies or IRS notices of garnishments get sent to a variety of sources. The most common places levies are sent would be to your employer, your bank, a 1099 source of self employment income or other sources of income. The IRS will do a through review of your last several years income tax returns to determine these sources to levy. IRS will look for sources of income including dividends, rental sources of property, and money market accounts. The IRS can even place a levy on your Social Security. IRS keeps a data base of these sources of income on everyones social security number in case you owe back taxes.

Below is some of the legal background for IRS Tax Levy or Tax Levies under the IRC (Internal Revenue Code) authority. Most of this information is taken from the IRS's IRM (Internal Revenue Manual) Section V, the collection process.

What is the IRS Legal Authority on tax levy or tax levies?

The Internal Revenue Code (IRC) authorizes the use of levies to collect delinquent tax. A levy can be attached to any property or right to property that belongs to the taxpayer, unless it is exempt. This is important because it gives the IRS the authority to place tax levies on delinquent taxpayers.

What is the difference between Notice of IRS Levy vs. IRS levies vs. IRS Seizure?

There is no legal distinction at all between an IRS levy and an IRS seizure.
Generally, the IRS will use a notice of levy (Form 668-A/668-W) to take a taxpayer's property held by someone else if it can be turned over by writing a check. As stated before over 2.6 million of these types of tax levies were issued last year. Those numbers are going up each year.

There is no required list or sequence for tax levies. Generally, the IRS will first send tax levies on taxpayer funds that are held by a third party. This is usually less time consuming. The ACS, automated collection service unit of IRS sends out levy notices directly from their computer system no more than 6 weeks after the final notice of Intent to Levy is sent to the taxpayer.

What is the appeals Process regarding levies?

Taxpayers may be entitled to a Collection Due Process hearing under IRC 6330, or an equivalent hearing. Everyone is entitled to these hearings.Notices of levy can also be appealed under the Collection Appeals Program regardless of whether or not the taxpayer can appeal under IRC 6330. This was created to give taxpayers a chance for a review that is independent from the Collection function. These are used in about 15 % of all cases.

Before property can be levied, the taxpayer must be given:

A notice and demand;
A notice of intent to levy;
A notice of a right to a Collection Due Process hearing.

The taxpayer must be given a notice of intent to levy. That is usually sent by U. S. Mail. The taxpayer has 30 days to pay the amount that is owed before property can be levied or seized.

This notice must be:

Given in person;
Left at the taxpayer's home or business;
Sent to the taxpayer's last known address by certified or registered mail.

A taxpayer's state tax refund can be levied, even though the taxpayer may not have been sent a notice of a right to a hearing. The taxpayer must be given the opportunity for a hearing within a reasonable time after the levy. IRS collects a large volume of back tax revenue this way.

As long as a request for a hearing is correctly addressed and postmarked timely, it is timely. IRS allows 15 additional days after the 30 day period ends before levying in case the taxpayer mails a request for a hearing on the 30th day.

If the notice was unclaimed, returned undeliverable, or delivery was refused, there is no need for IRS to wait the additional 15 days, as long as the notice has only been sent to one address. If multiple notices have been sent, IRS will wait the additional 15 days, unless all of them are returned undeliverable, unclaimed, or refused. As long as the notice is sent from IRS the clock is running on the levy.

How do they find you?

Generally the IRS mails the notices to your last known address. This would be what the IRS has on their main data base. This information was probably posted from the most recently filed and properly processed tax return. A last known address may be obtained or changed by information received from the United States Postal Service National Change of Address.

When a Notice of Intent to Levy and Notice of Your Right to a Hearing (L1058) is mailed to the taxpayer, it must be sent to the last known address. If other addresses have been received from third parties without a change to the official last known address, the IRS will send a copy of the L1058 and the enclosures to the taxpayer at these other addresses on the same date that the L1058 is sent to the last known address. The IRS will use regular mail for the copies sent to other addresses. We suggest any correspondence sent back to IRS be sent by certified mail.

How does IRS approve the Tax Levy?

Certain notices of levy or tax levies must be approved by managers. Even if property is exempt under a state homestead exemption law, it is not exempt from federal levy.

When submitting a notice of IRS levy or IRS levies for approval, the IRS agent must provide a manager the following:

A summary of any information the taxpayer has provided that may affect the decision to levy including claims that the assessment is wrong. It is important to document as much as you can to help your cause;
If the taxpayer has submitted any information, the IRS agent must provide an explanation that they have reviewed the information, and why the notice of levy should still be served. The IRS agent has a a lot of control in these situations. Your documentation is key to helping your cause;
Verification that the amount is still owed, IRS computers must confirm the amount is still unpaid;
An explanation that the notice of levy or levies are appropriate in consideration of the amount owed and any other circumstances that are known about the taxpayer and the liability, once again documentation very important;

Consider the following when determining if the levy is appropriate:

The taxpayer's responsiveness to attempts at contact and collection. Immediate contact with the IRS is very important;
Anything that is known about the taxpayer's financial condition or medical condition or current circumstance;
The taxpayer's compliance history, a very important factor;
The taxpayer's effort and willingness to pay the tax or explain reasons that cannot be done;
Whether current taxes are being paid in the current quarter;

The Internal Revenue Code describes property that is exempt from levy. The exempt levy sources include:

Unemployment benefits;
Certain annuity and pension payments, including payments under the Railroad Retirement Act, Railroad Unemployment Insurance Act, Special Pensions for Medal of Honor Winners, and Retired Serviceman's Family Protection Plan and Survivor Benefit Plan;
Workers Compensation;
Judgments for support of minor children, if the judgment is before the date of the levy;
Certain military service-connected disability payments;
Certain public assistance payments;
Assistance under the Job Training Partnership Act.