Tax Levy

September 22nd, 2008 by Reed Allmand

If you owe taxes and despite having received Letter 1058 – Final Notice of Intent to Levy and you have not request for a Collection Due Process Hearing with 30 days from the date of Letter 1058, the IRS can levy your bank account, wages and other assets to collect back taxes.

If your bank account is levied by the IRS, your bank will have to pay to IRS whatever money is in your account on the date the levy is received by your bank. You have 21 days to get the levy released. If you do not take action, you bank will send the money in your account to the IRS which will be used to clear your tax dues. If your dues are still not cleared, the IRS can issue a new bank levy. When the IRS levies your bank account, the levy is only for the particular day the levy is received by your bank. The bank is required to remove whatever amount is available in your account that day up to the amount of the IRS’s levy and send it to the IRS in 21 days. The levy does not affect any future deposits made into your account unless the IRS issues another levy.

If the IRS levies your wages, the levy is served on your employer. Your employer will be required to pay over a large portion of your paycheck to the IRS till your tax debt is cleared. The IRS does not take all of your paycheck; they allow you enough to live on – the standard deduction amount and personal exemption amount based upon your filing status and number of dependents. The levy on your wages will only end when the IRS releases the levy.

The levy will end when (a) the levy is released (b) You pay off your tax debts or (c) the statute of limitation prevents the collection of tax

You can appeal against the action of the IRS after the levy under the Collection Appeals Program. The IRS normally suspends collection action during the appeal. If your appeal is successful, the levy will be released.

About Reed Allmand

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Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."

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