The IRS and State Taxing Authorities have the power to collect back taxes by levying on taxpayers' property as a result of a Tax Lien. When a person owes back taxes, the IRS/State can file a lien on a particular taxpayer’s assets after meeting certain statutory requirements, which attaches to all rights, title and interest of the taxpayer. Once the IRS/State has a lien on all of a taxpayer's assets, they may enforce it by administratively levying his/her assets. The issuance of a tax levy can result in the actual seizure of financial assets, such as wages, bank accounts or accounts receivable or the seizure of real and personal property such as a house, a car, or a boat (which the IRS/State can, in turn, sell to collect the owed funds)
Bank Levy: A bank levy is one form of Enforced Collection that the IRS/State can use to collect back taxes. If the IRS/State issues a bank levy, your bank is forced to freeze any and all of your accounts and all the funds therein. The bank must hold your funds frozen for 21 days, at the end of which, if the tax debt is not resolved, the money is transferred to the IRS/State. This type of levy is a “one shot” levy, insofar as it does not affect future deposits made into your account; however, the IRS/State may issue another bank levy.
Wage Levy (Wage Garnishment): A wage levy, or wage garnishment, is another type of IRS tax levy. As a collection tactic, the IRS/State often imposes a wage garnishment, which means that they literally take money out of every paycheck – often seriously jeopardizing an individual’s standard of living. Once the IRS files a wage garnishment with an employer, the employer will be legally required to begin withholding funds from the employee’s paycheck. This withholding can be as much as 35-70% of the taxpayer’s net take-home pay. This kind of levy is a “continuous” levy because the employer will continue to withhold money from each paycheck until the IRS/State notifies the employer that the levy has been released.
With much more at stake, it is even more critical to protect your business assets. As is generally true of any situation with greater stakes, it is even more challenging to protect the interests of your business, so it is important to know when to ask for help.
How Crest Tax Group Can Help
Through qualified tax compliance programs, Crest Tax Group strives to resolve a taxpayer’s liability, possibly reduce or eliminate penalties, and bring back financial peace of mind. While results vary depending on each client's financial qualifications, our team of Enrolled Agents and Tax Attorneys have the experience to properly service the situation to reduce the damage to you, your finances, and your life. For more information on what to do in the event that the IRS/State has imposed a tax levy or tax lien on you, individually and/or on your business, contact our professional team at Crest Tax Group. We will evaluate your unique situation and recommend the most appropriate course of action, immediately.