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Tax Levy | What It Means To You | Florida

Updated: Nov 11

FLAT FEE TAX RELIEF



A tax levy, under Federal law, is an enforcement action by the Internal Revenue Service (IRS) under statutory authority, generally without going to court, to seize property to satisfy a tax liability. A tax levy "includes the power of distraint and seizure by any means." No court permission is required for the IRS to order a tax levy. While the government relies mainly on voluntary payment of tax, it retains the power to garnish and seize in order to collect involuntarily from those who persistently refuse to pay. The IRS can levy upon wages (#IRSgarnishment), bank accounts (#IRSbanklevy), 15% of your social security payments (#FederalPaymentLevyProgram), accounts receivables, insurance proceeds, real property, and, in some cases, a personal residence. Under Internal Revenue Code section 6331, the Internal Revenue Service can "levy upon all property and rights to property" of a taxpayer who owes a Federal tax liability. The IRS can levy upon assets that are in the possession of the taxpayer, called a seizure, or it can levy upon assets in the possession of a third party, a bank, a brokerage house, etc. All future statutory references will be to the IRS Code unless noted otherwise.


Tax Levy - How It Works


According to the U.S. Supreme Court, the power of administrative levy for federal taxes dates back to the year 1791. In other words, a tax levy goes back to very beginning of the United States. The Fifth Amendment of the Constitution forbids the government (whether state or federal) from taking an individual's property without due process of law. This rule applies to an IRS levy (#IRSwagegarnishment). To comply with the our Constitution, the IRS must provide the taxpayer notice of the coming levy and an opportunity to be heard. Per Section 6330(a)(2), the IRS must send to the taxpayer a notice by either personal hand delivery, or through certified mail, or left at the taxpayer's usual place of business. The notice must arrive at least thirty days prior to the levy taking place.

However, if the taxpayer is planning to depart from the United States, or conceal himself or herself; planning to place his or her property beyond the reach of a commissioner by concealing it, by dissipating it, or by transferring it to other persons; or financially imperiled, under 26 U.S.C. Section 6331(a), the IRS may determine the collection of the tax is in jeopardy and may immediately order a tax levy after serving notice and demand for payment of the tax. In such cases, notice of the jeopardy levy need not be served upon the taxpayer until after the levy has already been served on the levy source such as the taxpayer's bank. The IRS is required to mail out the notices. The IRS is not required to make sure that you received the Notice to Levy.

The "Notice of Intent to Levy" must include "in simple and nontechnical terms the right of a person to request a hearing during the 30 day period" before the levy will be effective. This hearing is referred to in IRS correspondence as the "collection due process" or CDP hearing. The notice will include the IRS Form 12153 which the taxpayer can fill out and mail in to request a hearing. A taxpayer is entitled to one CDP hearing for each tax period (tax year) to which the levy applies.

The CDP hearing must be held before a neutral, impartial hearing officer "who has had no prior experience with the respect to the unpaid tax." At the hearing, the taxpayer may raise challenges to the collection actions, may seek Innocent Spouse Relief, and may present alternative collection actions such as Installment Agreements (#IRSpaymentplan) or an Offer in Compromise (#IRSsettlement). Under certain limited circumstances the tax debtor may challenge the underlying tax liability.

If the taxpayer is unhappy with the decision at the CDP hearing, he or she may contest the decision by filing a petition with the United States Tax Court within 30 days of the adverse determination. Tax Levy Upon a Personal Residence Under Section 6334(e) a tax levy is allowed on principal residences under various circumstances. In order to take a principal residence, the IRS must go to court and seek the permission of a federal magistrate to levy a house in which the taxpayer lives. However, under no circumstances can the IRS levy on a personal residence if the total amount owed is equal to or less than $5000.

Tax Levy - Garnishment of Wages The IRS can order your employer to seize a portion of your wages and paycheck. Section 6334 does allow for an exempt amount that must remain outside of the tax levy. After the order to levy is imposed, your paycheck will be very very small, sometimes leaving you with barely enough to get by on. Kiss your car payment good bye. You won't have enough for your rent.

A tax levy in the form of garnishment upon wages is considered to be a continuous levy, which mean, the wage levy needs to be applied only once and will be applicable to future wages until either released by the IRS under §6343 or the debt is fully paid.

The tax professionals at Flat Fee Tax Relief routinely work to have an IRS wage garnishment stopped and released in one day. With an IRS wage garnishment, no additional levy enforcement action is necessary by the IRS. Distinguish this from a bank account levy.


The Effect of an Offer in Compromise on an IRS Tax Levy. Under federal tax regulations, "the IRS will not levy against the property or rights to property of a taxpayer who submits an Offer to Compromise, to collect the tax liability that is the subject of the settlement offer, during the period the offer is pending, for 30 days immediately following the rejection of the offer, and for any period when a timely filed appeal from the rejection is being considered by Appeals."

Once the IRS decides that an offer is processable and that the offer includes all the paperwork and forms properly filled out, the IRS must stop levy actions under §6331. If the offer is missing documents or forms, however, the IRS can return the paperwork to the debtor as un-processable, and can then levy or garnish her property. The tax professionals at Flat Fee Tax Relief have a 96% rate of successful Offer in Compromise submissions. This article is provided by the tax pros at Flat Fee Tax relief who have been providing valuable IRS tax debt help, from coast to coast, at a very affordable fee for more than a decade. Our teams are strategically located in Clearwater, Florida, and San Diego, California. This allows our IRS experts to be available from 8 A.M. Eastern to 6 P.M. Pacific time. Our hours are invaluable when a release of a tax levy in one day is of paramount importance.



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