Boleman Law Firm - Virginia Bankruptcy Experts

Tax Levies

What is a Tax Levy and How Does it Differ from a Tax Lien?

A tax levy is different from a tax lien. A lien is a document used as security for the tax debt, while a tax levy is a seizure of your assets to pay off a tax debt.

What This Means to You

If you owe a tax debt, then your property can be levied or seized to pay off your debt... Examples of items that can be seized include the following:

tangible property such as vehicles, houses, land, boats

retirement and social security benefits

salary and commissions

employment reimbursements (i.e., Mileage, meals, etc.)

business assets and accounts receivable

savings and checking account

securities

any federal payments due to you

state tax refunds

How We Can Help You

If you owe a tax debt, you must pay it. If you are unable to pay it and do not qualify for an Offer-in-Compromise, there is another option. We can file a bankruptcy for you to stop the tax levy. In addition, through the bankruptcy it is possible to reduce or even eliminate your tax debt, including interest and penalties.

Exceptions and Problem Areas

Frozen Bank Account: If your bank account is levied, the bank will freeze your account for about 21 days to allow you time to solve any problems from the levy. After that time period, the bank is required to send the money plus interest (if it applies) to the IRS (or taxing entity).

Social Security: Although a tax levy can attach to your social security benefits, it typically cannot attach to your Supplemental Security Income (SSI) payments.

Caution: The information above is a general outline of tax levies and liens and does not intend to cover all of the legal intricacies that affect resolving your tax debt. Consult with a qualified bankruptcy attorney with tax experience to determine the best course of action for solving your tax problems.

The IRS will usually only levy your property once the following three steps have been met:

The IRS has assessed the tax and sent you a Notice and Demand for Payment;

You failed to pay the tax; and,

A levy notice called a “Final Notice of Intent to Levy and Notice of Your Right to A Hearing” has been sent to you. Please note: if the IRS levies your state tax refund, you may receive the Notice of Levy on Your State Tax Refund and Notice of Your Right to Hearing after the levy has taken place.

Please note that there are times that the IRS will issue a levy without following the above procedures.