Last year the Internal Revenue Service (IRS)
sent out 2,631,038 Levy Notices
the number of levies is expected
to be much higher in the future
The Federal Government, as well as most states, is flat broke. Politicians can talk all they want about helping the "little guy" when talking about about budget deficits, but, make no mistake about it, the IRS will seize your paycheck, your Social Security, your bank account or any other asset if you owe any amount of back tax debt. The IRS will execute a levy on you, the delinquent taxpayer, if you owe the the IRS a past due tax debt / a back tax liability, no matter the amount owed. The IRS (Internal Revenue Service) will notify you, the taxpayer, that it intends to seize your wages, your Social Security, your Social Security Disability (SSDI), your commissions, your bank account or any other asset that they may find.
A final notice is sent out by the IRS. This could be a 504 Notice, CP-90, CP-91 or LT 11 (see our blog on Notices for a complete list), Notice of Intent to Levy and Your Right to a Hearing. These Final Notices are usually sent by certified mail but could be left at your home or work.
In many cases the taxpayer does not receive any of the notices, this may be because the taxpayer has moved. The IRS only has to send the Notice out for it to be effective. It isn't necessary for the IRS to verify that you have received the Notice of Intent to Levy for the Levy to be effective.
Regardless of whether or not you have received a notice, the IRS (Internal Revenue Service) will levy you on the date specified in the notice. Should you receive a Final Notice of Intent to Levy and Your Right to a Hearing, contact us at Flat fee Tax Service, Inc.
Who Will the IRS Send a Tax Levy to?An IRS Notice of Intent to Levy and Your Right to a Hearing or "IRS notice of garnishment" will be sent to a variety of sources. The most common places that the IRS would send / execute a levy would be to your employer, the Social Security Administration (Social Security or Social Security Disability / SSDI), your bank, a brokerage account, a 1099 source of self employment income or other sources of income.
The IRS will do a thorough review of your last several years income tax returns to determine these sources to levy through their computer system. IRS will look for sources of income including dividends, rental sources of property, and money market accounts.
The IRS will place a levy on your Social Security through the Federal Payment Levy Program (FPLP). See our blogs on the Federal Payment Levy Program (FPLP) for more detailed information. The IRS (Internal Revenue Service) keeps a detailed data base of these sources of income on everyone's social security number in case you owe back taxes.
Below is some of the legal background for an IRS Levy or IRS Tax Levy under the IRC (Internal Revenue Code) authority. As an FYI, the IRS uses the word "levy" and does not use the word "garnishment". For our use, we will use both words as most laymen know a wage seizure as a garnishment. Most of the information below is taken from the IRS's IRM (Internal Revenue Manual) Section V, the collection process.
Does the IRS have the Legal Authority to Levy your Assets?
There is no legal distinction at all between an IRS levy and an IRS seizure. The Internal Revenue Service (IRS) will use a Notice to Levy (Form 668-A/668-W) to seize / take your (a delinquent taxpayer) property held by someone else if it can be turned over by writing a check. As stated above the IRS executed over 2.6 million of these types of tax levies last year. The number of IRS levies will be going up each year.
There is no required list or sequence for an IRS Levy. Generally, the Internal Revenue Service will first send tax levies on a delinquent taxpayer's funds that are held by a third party. This is nearly "effortless" and is usually less time consuming. The IRS computer system is continually becoming more sophisticated. The ACS or "Automated Collection Service" unit of IRS sends out a levy notice directly from their computer system (ACS) no more than 6 weeks after a Final Notice of Intent to Levy and Your Right to a Hearing (CP 504, CP-90, CP-91, CP 297, LT 11, etc.) is sent to you, the delinquent taxpayer.
What is the appeals Process regarding an IRS Levy?Taxpayers may be entitled to a Collection Due Process hearing under IRC 6330, or an equivalent hearing. Every delinquent taxpayer is entitled to these hearings. A Notice to Levy and can also be appealed under the Collection Appeals Program regardless of whether or not the taxpayer can appeal under IRC 6330. This was created to give delinquent taxpayers a chance for a review that is independent from the Collection function. These are used in about 15 % of all cases.
Before property can be levied, a delinquent taxpayer must be given:
- A notice and demand;
- A Notice of Intent to Levy and Your Right to a Hearing;
- A Notice of a Right to a Collection Due Process Hearing.
You, the delinquent taxpayer, must be given a Notice of Intent to Levy. That is usually sent by U. S. Mail. The taxpayer has 30 days to pay the amount that is owed before property can be levied or seized.
An IRS Levy Notice must be:
- Given in person;
- Left at the taxpayer's home or business;
- Sent to the taxpayer's last known address by certified or registered mail.
As long as a request for a hearing is correctly addressed and postmarked timely, it is timely. The Internal Revenue Service (IRS) allows 15 additional days after the 30 day period ends before levying in case the taxpayer mails a request for a hearing on the 30th day.
If the notice was unclaimed, returned undeliverable, or delivery was refused, the IRS will not wait the additional 15 days, as long as the notice has only been sent to one address. If multiple notices have been sent, the IRS will wait the additional 15 days, unless all of the Notices of Intent to Levy or Notices to Levy are returned undeliverable, unclaimed, or refused. As long as the Notice to Levy is sent from the IRS the "Levy clock" is running.
How will the IRS find you?The IRS will mail the Notice of Intent to Levy and Notice to Levy to your last known address. This would be what the Internal Revenue Service (IRS) has on their main data base. This information was probably posted from the most recently filed and properly processed tax return, from a 1099 from a bank or employer or from W-2 information. A last known address may be obtained or changed by information received from the United States Postal Service National Change of Address.
When a Notice of Intent to Levy and Notice of Your Right to a Hearing (L1058, CP-90, CP-91, etc.) is mailed to you, the delinquent taxpayer, it must be sent to the last known address. If other addresses have been received from third parties without a change to the official last known address, the IRS will send a copy of the L1058 (or other equivalent notice) and the enclosures to the taxpayer at these other addresses on the same date that the L1058 is sent to the last known address. The Internal Revenue Service will "shotgun" the Notices to Levy. The Internal Revenue Service will use regular mail for the copies sent to other addresses.
We, at Flat Fee Tax Service, Inc., suggest any correspondence sent back to the IRS be sent by certified mail. The IRS is notorious for "losing" correspondence. Whenever you walk in documents such as delinquent tax returns, be sure to have your tax returns time stamped and make sure you have copies.
How does the IRS approve a Tax Levy?Certain notices of levy or tax levies must be approved by an IRS manager. Even if your property is exempt under a state homestead exemption law, it is not exempt from a Federal Levy.
When submitting a Notice of an IRS Levy / IRS levies for an approval, an IRS agent must provide their manager the following:
- A summary of any information the taxpayer has provided that may affect the decision to levy including your claim that the tax assessment is wrong. If you haven't picked up or opened your mail, this will not be a factor;
- If you, the taxpayer, has submitted any information, an IRS agent must provide an explanation that they have reviewed the information, and why the notice of Levy should still be served.;
- Verification that the amount is still owed, the IRS computers must confirm the amount is still unpaid and delinquent;
- An explanation that the Notice to Levy or levies are appropriate in consideration of the amount owed and any other circumstances that are known about the taxpayer and the liability, once again documentation very important;
- You, the delinquent taxpayer, responsiveness to attempts at contact and collection. Immediate contact with the Internal Revenue Service is very important;
- Anything that is known about the taxpayer's financial condition or medical condition or current circumstance;
- The taxpayer's compliance (filing of tax returns or lack thereof) history, a very important factor;
- The taxpayer's effort and willingness to pay the tax or explain reasons that cannot be done (are you Currently not Collectible or eligible for an Offer in Compromise);
- Whether current taxes are being paid in the current quarter (self employed);
The Internal Revenue Code describes property that is exempt from an IRS Levy. Sources exempt from a levy include:
- Unemployment benefits;
- Certain annuity and pension payments, including payments under the Railroad Retirement Act, Railroad Unemployment Insurance Act, Special Pensions for Medal of Honor Winners, and Retired Serviceman's Family Protection Plan and Survivor Benefit Plan;
- Workers Comp;
- Judgments for support of minor children, if the judgment is before the date of the IRS Levy;
- Certain military service-connected disability payments;
- Certain public assistance payments;
- Assistance under the Job Training Partnership Act.
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