IRS Levy And Seizure
What Is the Difference Between a Levy and a Lien?A tax levy is a seizure of an asset to satisfy a back tax debt. A tax lien is a legal claim to an asset as security for a back tax debt. A levy actually takes the property to pay for the back tax owed to the IRS. A lien merely records a claim to the property.
Can the IRS Seize My Home?Yes, the IRS is able to seize assets to collect back tax owed to the US government. Seizing your primary residence is more difficult than simply reaching into your bank account or taking your state income tax refund. The IRS needs a court order to take your home. In most cases, seizing your primary residence is the last collection option. The most common IRS seizures are wage garnishments and bank levies.
However if you secure a formal resolution to your tax debt, the IRS will not seize your assets. And if you currently have a seizure in place, obtaining a formal IRS tax debt resolution should cause the IRS to release it. You may enter into a formal Installment Agreement with the IRS, Currently Not Collectible status, or the IRS may approve your Offer in Compromise.
The IRS is not allowed to seize the following:
- Unemployment Benefits;
- Workmen's Compensation;
- Books and tools of the trade;
- Certain public assistance payments;
- Undelivered mail;
- Certain service-connected disability payments.
Will the IRS Notify Me Before a Levy is Sent to My Bank Account?In most cases, the IRS requires three conditions are met before a Notice of Levy is sent to your bank.
- Assess the tax to you and send you a Notice and Demand for Payment;
- You neglect or refuse to pay the assessed tax;
- The IRS sends a Final Notice of Intent to Levy to your last known address, and you fail to respond correctly within a 30-day time period
The Final notice of Intent to Levy allows you to request a Collection Due Process (CDP) hearing with IRS Appeals. A timely filed CDP will, in most cases, stop any enforced collection action such as levy and seizure, until Appeals has made a determination.
Will the IRS Release a Levy?The IRS is required to release a levy under the following circumstances:
- The tax debt has been paid or can no longer be collected due to the CSED;
- Release of the levy will facilitate collection of the tax debt;
- The delinquent taxpayer has entered into a formal Installment Agreement;
- It has been determined that the levy is creating an economic hardship on the delinquent taxpayer;
- The fair market value of the levied property is greater than the tax debt owed and part of the asset may be released from the levy without hindering collection of the tax debt
In some cases, a Collection Appeal Program (CAP) request or form 911, Request for Taxpayer Advocate Assistance may be submitted to help facilitate the release of the levy if any of the circumstances above apply to your case and your IRS Revenue Officer or representative refuses to release the levy.
What If The IRS Levied The Wrong Bank Account?If the IRS has sent a levy to your bank account by mistake, you may qualify for relief. This sometimes happens when a child's bank account is connected to the social security number of a parent that owes taxes. Use IRS Publication 4528, Making an Administrative Wrongful Levy Claim Under Internal Revenue Code (IRC) Section 6343(b) as a guide to help you submit your written request. The request must be made by a person other than the taxpayer who owes the back taxes.
What Is The Difference Between A Levy And A Seizure?Seizures are most often described as a levy on real property and tangible personal property, such as real estate and vehicles. A levy refers to intangible properties held by third parties, such as money in bank accounts. While both seizures and levies are subject to the 3 prerequisite conditions listed above, additional conditions must be met before the IRS seizure of property. Additionally, a Revenue Officer or IRS Automated Collection System (ACS) may issue a levy, while only a Revenue Officer may conduct a seizure.