A tax levy, also called a bank levy, is the legal seizure of personal property by the IRS. This is only used when your tax debts are outstanding and all other attempts to collect on your debt have been unsuccessful.
Here are some of the assets that the IRS can seize as part of a tax levy:
- Bank accounts
- Rental income
- Cash value of your life insurance
A tax levy is one of the harshest penalties that the IRS can administer. If they seize your property, it will be sold to settle your tax debt.
Avoiding a Tax Levy
There are a few ways to avoid having the IRS take your property. The first is paying your taxes, of course. However, this is easier said than done in some cases, as you may not be able to afford to pay your tax debt in full.
When you can’t pay your whole tax debt, the IRS will accept various payment arrangements. As long as you pay the agreed-upon amount on time, there’s no reason for the IRS to issue a levy.
Even so, the IRS may still issue a tax levy if all of the following conditions are met:
- They send you a tax bill.
- You refuse or neglect the tax bill.
- They issue a Final Notice of Intent to Levy and Notice of Your Right to a Hearing 30 days before the levy.
- No hearing is requested, or the hearing rules in the IRS’s favor.
In other words, the IRS can’t just issue a levy without your knowledge or without giving you a chance to settle your debt.
So, if you’ve received any of these notices and are facing a tax or bank levy, obtaining professional help ASAP will be your best option.
The team at Taxation Solutions, Inc. is here for all of your bank or tax levy issues in Memphis, and we’re more than happy to help you in this difficult time. Contact us today for a consultation.