Non-payment of income taxes or failing to make arrangements to settle IRS tax debts gives the IRS the power to seize any type of property or money from your accounts. This power does not require a court’s permission. It is called a tax levy or, more specifically, a bank levy, which occurs when funds are taken directly from your bank accounts.
A bank levy is the most powerful tool in the IRS arsenal, and it is used when the following conditions are met:
- After due assessment by the IRS, you receive a notice and demand for payment of tax.
- You either refuse or neglect to pay the tax.
- You receive a ‘Final Notice of Intent to Levy and Notice of Your Right to a Hearing.’
A bank levy is a serious matter. Under bank levies, the IRS can:
- Garnish your wages
- Seize your property and assets
- Acquire insurance earnings
- Acquire rental incomes
- Acquire retirement account funds
There are different types of account levies. A ‘one shot’ levy is when the bank takes the total amount owed and sends it to the IRS. A ‘continuous’ levy, like wage garnishments, deducts money from your account regularly. As you can see, levies can be detrimental to your financial situation and livelihood.
Luckily, the IRS has a provision to release the levy and establish a repayment plan according to your specific financial situation, but it can be difficult to initiate the process. A certified and experienced tax professional will ensure you secure the best tax levy relief.