For the purposes of this article, we will use the term "IRS Garnishment" rather than the correct term "Levy".
An IRS Garnishment (levy) is a legal seizure of your property to satisfy an income tax debt. An IRS Garnishment is different from a Federal tax lien. A Federal tax lien is a claim used as security for the income tax debt, while an IRS Garnishment (levy) actually takes the property to satisfy the tax debt.
If you do not pay your overdue income tax liability (or make arrangements to settle your tax debt), the IRS may seize and sell any type of real or personal property that you own or have an interest in. As an example,
The IRS could seize and sell property that you hold (such as your car, boat, or house),
The IRS could garnish and seize the property that is yours but is held by someone else (such as your wages, Social Security, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions).
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The IRS will usually execute a garnishment (levy) only after these three requirements are met:
The IRS has assessed the income tax and sent you a Notice and Demand for Payment;
You neglected or refused to pay the overdue income tax; and
The IRS sent you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (LT 11, CP 90, CP 91, etc.) at least 30 days before the garnishment (levy). The IRS could 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.
IRS Final Notice
IRS GARNISHMENT IS CONTINUOUS
Once the IRS executes a Garnishment (levy) on your wages, paycheck, Social Security, Disability (SSDI, it is continuous. This means that once the source of your money has been served with the garnishment, it will continue until you either pay the tax liablity or the garnishment is stopped and released.
You could ask an IRS manager to review your case, or you may request a Collection Due Process (CDR) hearing with the Office of Appeals by filing a request for a Collection Due Process hearing with the IRS office listed on your notice. You must file your request within 30 days of the date on your notice. Some of the issues you may discuss include:
You paid all you owed before the IRS sent the levy notice,
The IRS assessed the tax and sent the garnishment notice when you were in bankruptcy, and subject to the automatic stay during bankruptcy,
The IRS made a procedural error in a tax assessment,
The time to collect the overdue income tax (called the statute of limitations) expired before the IRS sent the levy notice,
You did not have an opportunity to dispute the assessed tax liability,
You wish to discuss the collection options, or
You wish to make a spousal defense.
At the conclusion of your hearing, the Office of Appeals will issue a determination. You will have 30 days after the determination date to bring a suit to contest the determination. You can refer to the IRS Publication 1660, Collection Appeal Rights, for more information. If your property is levied or seized, contact the employee who took the action. You also may ask the manager to review your case. If the matter is still unresolved, the manager can explain your rights to appeal to the Office of Appeals. Good luck with that if you are on your own.
Garnishing your Wages, Social Security, Disability (SSDI), State Refunds
If the IRS executes a garnishment of your wages, salary, Social Security, Disability (SSDI) or federal payments, the garnishment will end when:
The IRS garnishment is released,
You pay your income tax debt, or
The time expires for legally collecting the income tax (Statute of Limitations).
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