When it comes to collecting outstanding debt from taxpayers with unfiled back tax returns the IRS has a full arsenal at their disposal to use against the delinquent taxpayer.

One of these weapons is a Levy.

If you didn’t know by now a levy can be your worst nightmare. And your boss will not be so happy when he has to do extra paperwork to obey a hold order on your wages.

What exactly is a Levy?

A levy is a legal seizure of your property to satisfy a tax debt. Levies are different from liens. A lien is a legal claim against property to secure payment of the tax debt, while a levy actually takes the property to satisfy the tax debt.

Where does Internal Revenue Service (IRS) authority to levy originate?

The Internal Revenue Code (IRC) authorizes levies to collect delinquent tax. See IRC 6331. Any property or right to property that belongs to the taxpayer or on which there is a Federal tax lien can be levied, unless the IRC exempts the property from levy.

A Back Tax Analysis can quickly reveal if you are in danger of getting levied by the IRS before they take action and avoid all the stressed that is involved with dealing with the IRS.

What actions must the Internal Revenue Service take before a levy can be issued?

The IRS will usually levy only after these three requirements are met:

  • The IRS assessed the tax and sent you a Notice and Demand for Payment (a tax bill);
  • You neglected or refused to pay the tax; and
  • The IRS sent you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy. The IRS may give you this notice in person, leave it at your home or your usual place of business, or send it to your last known address by certified or registered mail, return receipt requested. Please note: if the IRS levies your state tax refund, you may receive a Notice of Levy on Your State Tax Refund, Notice of Your Right to Hearing after the levy.

When will the IRS issue a levy?

If you do not file your back taxes or pay your taxes (or make arrangements to settle your debt), and the IRS determines that a levy is the next appropriate action, the IRS may levy any property or right to property you own or have an interest in. For instance, the IRS could levy property that is yours, but is held by someone else (such as your wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions). Or, the IRS could seize and sell property that you hold (such as your car, boat or house).

So as you can see a Levy can have a significant impact on your personal and financial life.  Not mention cause embarrassment with co-workers and family if you don’t take care of the tax problem before they issue a Levy.

Garcia’s Tax Service has a “Back Tax Analysis” program that will review all IRS letters and determine if you are in danger of getting levied by the IRS.

To learn more and receive a complementary tax advice go to http://garciastaxservice.com/back-tax-analysis.