Removing Tax Penalties: What is a Levy?ReviewAdviceFAQ's

Removing Tax Penalties: What is a Levy?

If you owe money to the government, you better pay up or else you will face serious penalties. You might owe more fines and penalty fees than you already do, you could get arrested or you could have your wages and possessions garnished. The government is willing to work with you and set up a payment plan, so don't be afraid to contact them if you owe them money.

What is a Levy?

Specifically, an IRS tax levy is when the government can take possession of your property if you've refused to pay them the money you owe them. Once the property is in their possession, they sell it for a profit, thus reducing your liability to them. Examples of tax levies include homes, cars, boats or any other physical property. The government can also take property that is held by someone else – such as a tax levy on wages, bank accounts, rental income or commissions.

Removing Tax Penalties: What is a Levy?

Why Would You Get a Tax Levy?

A tax levy is a last resort option for the IRS to get their money. At this point, the government assumes you're not willing to work with them or set up a payment plan and decides to take further action. It should come as no surprise to you if you receive an IRS tax levy.

Before receiving a tax levy against your property or wages, the IRS will send you a Notice and Demand for Payment. It is then up to you to pay the debt in full or call and arrange for a payment plan. If you refuse to take action, the government will send you another notice. This one is the Final Notice of Intent to Levy and Notice of Your Right to A Hearing, which will be sent 30 days prior to you receiving an IRS tax levy. If you still refuse to handle the debt, you can expect your wages or property to be garnished.

Are There Any Exceptions to a Tax Levy?

If a tax levy is placed on your wages and it causes you financial hardship, the levy might be released. This is up to the IRS to determine, though, and it does not mean you do not have to pay your taxes. Most likely, the IRS will work out a payment plan with you moving forward and release the levy.

The only way to actually get rid of the tax levy is by paying your balance in full, arranging for a payment plan or the time expiring before they are able to collect. The government has 10 years to collect any tax money that is owed to them, so it's best to handle the problem as soon as possible instead of hoping it just goes away. There are a few organizations that can help, if you need it. Owing the IRS is worse than owing any debt collector. If you owe the IRS back taxes and are afraid of getting an IRS tax levy, contact the IRS immediately to work out a payment plan.

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