The IRS is one of the most aggressive and successful collection agencies, armed with billions of dollars and thousands of employees to collect debts. Central to its efforts is the federal tax levy, which allows the IRS to seize property or wages to satisfy tax debts.
Wage Levy
A wage levy permits the IRS to contact your employer and require them to send a portion of your paycheck directly to the IRS. Employers must comply, and deductions will appear on every paycheck. While the IRS must leave you with a minimal amount of income, the remaining amount may be insufficient for basic living expenses. Independent contractors (1099 earners) are not exempt from wage levies; the IRS can garnish their earnings similarly.
Bank Levy
A bank levy is more severe, as it allows the IRS to contact your bank and seize funds directly from your account. Unlike wage levies, the IRS is not required to leave you with any money, potentially draining your account entirely.
Broader Seizures
The IRS can also target other assets such as your home, retirement accounts, and nearly anything else you own.
Preventing or Addressing a Levy
Fortunately, the IRS must follow procedures before seizing your wages or property. They are required to issue a Notice of Intent, giving you an opportunity for a hearing to present your case. Understanding whether to request a hearing and how to respond to this notice is crucial.
The process for avoiding a levy or getting an existing one released is complex. Sometimes, the Notice of Intent is merely a warning without immediate consequences. Consulting a tax lawyer in Dallas can help you navigate your options effectively. Contact Margolies Law Office for assistance.