When I worked as a revenue officer for the IRS in Los Angeles County, California, I took your money out of your bank account or levied your salary earned at your job by simply mailing a form – a levy – to the bank or to your boss. Those were the good ol’ days. These days, as a tax lawyer I help those who are at the receiving end of a levy.
The IRS issues a levy to satisfy a tax debt by seizing your property. Levies and liens are not the same. To secure its claim for unpaid taxes, the IRS files a lien in the county where you have property, be it in Los Angeles County, Santa Barbara County, Ventura County, or Orange County. In contrast, a levy actually takes the property to satisfy your tax debt.
If your property is levied or seized, contact your tax attorney first and then have your attorney contact the employee who took the action. You also may ask the manager to review your case. If the matter is still unresolved, the manager can explain your rights to appeal to the Office of Appeals.
The IRS may seize and sell any type of real or personal property that you own or have an interest in throughout the United States if you do not pay your taxes (or make arrangements to settle your debt). For instance, the IRS
Can seize and sell property that you hold such as your car, boat, or house, or —
Can levy property that is yours but is held by someone else such as your wages, commissions, bank accounts, California State tax refund, licenses, rental income, accounts receivables, retirement accounts, dividends, and the cash loan value of your life insurance.
Often, the IRS will levy only after 3 requirements are met:
The IRS assessed the tax and sent you a Notice and Demand for Payment;
You neglected or refused to pay the tax; and
The IRS sent you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy. This notice might be delivered to you in person, left at your home, or your place of business (having the effect of embarrassing you in front of co-workers).
When you receive the notice, you should ask an IRS manager to review your case, or you may request a Collection Due Process hearing by filing a request for a Collection Due Process hearing with the Office of Appeals. You must file your request within 30 days of the date on your notice; no exceptions. At the conclusion of your hearing, the Office of Appeals will issue a determination. You will have 30 days after the determination date to bring a suit to contest the determination. For more information refer to Publication 1660, Collection Appeal Rights.
Some of the issues you may discuss include:
You paid all you owed before the IRS sent the levy notice
You wish to make a spousal defense
The IRS assessed the tax and sent the levy notice during your bankruptcy and subject to the automatic stay during bankruptcy
The statute of limitations (time to collect the tax) expired before the IRS sent the levy notice
You did not have an opportunity to dispute the assessed liability
You contact the IRS to discuss the collection options, or
The IRS made a procedural error in an assessment
If the IRS levies your bank account, your bank must hold funds you have on deposit, up to the amount you owe, for 21 days. This holding period allows time to resolve any issues about account ownership. After 21 days, the bank must send the money plus interest, if it applies, to the IRS. The levy takes only the money in the account at the moment the bank receives the levy; money deposited any other time is not subject to that particular levy.
If the IRS levies your wages, salary, or federal payments, the levy will end when:
You pay your tax debt
The levy is released, or
The time expires for legally collecting the tax.
Your tax lawyer should be able to help with this type of tax problem if he has the proper experience. To speak with an attorney who has experience working with the IRS, call Mitchell A. Port at 310.559.5259.