When taxes are not filed and/or unpaid, the IRS has the authority to take action to collect any debt owed to them by a taxpayer. Within its authority, the IRS can do everything from filing a substitute return for you to withholding any future refunds and freezing your financial accounts to applying a levy against you. Levies differ from liens, as with a levy, the IRS has the right to seize any of your property in order to satisfy a tax debt. A lien, only puts a legal claim against your property to secure payment of the debt.
With a levy, the IRS can seize property, such as homes, cars and other items of high value, as well as withdraw any available money from your financial accounts. This also includes withdrawing money from any future deposits that are made into your bank accounts. Once the property is sold at auction or other means, the monies are then applied to your tax debt. You are then billed and responsible for any leftover debt.
Before the IRS can place a levy on a taxpayer, other attempts to collect money for the tax bill must be taken. Before the IRS issues a levy, they usually send you a Notice and Demand for Payment. This is your tax bill stating how much you owe and when it needs to be paid by. If you neglect or refuse to pay your tax bill, the IRS will then send you a Final Notice of Intent to Levy and Notice of Your Right to a Hearing. This is the levy notice and must be sent to you at least 30 days prior to the levy being applied. The final notice is often sent to you by certified mail, but can also be delivered in person to you at home or at work. Keep in mind, if the IRS places a levy on your state tax refund, you may receive the Notice of Levy on Your State Refund and your Notice of Your Right to a Hearing after the levy is in place.
It is possible to avoid a levy. This can be done by filing tax returns on time, taking care of any back taxes and if needed, reaching out for help. Instead of ignoring your tax bill, contact the IRS and see what your options are to take care of the debt. It may be possible to set up a payment plan, get an extension, settle for less than you owe or apply to have your entire tax debt forgiven.
Failure to pay your taxes may result in additional collection processes set forth by the IRS. This may include having a levy placed against you in an attempt to seize property and money from your financial accounts. If you receive a final notice, do not ignore it. Even if you believe you do not owe the money, you cannot ignore a final notice. Contact the IRS or a tax professional to see what your options are to avoid the levy being finalized. Please don’t hesitate to contact us with any questions about your tax problems at 800-901-0885