What is a Federal Tax Levy?

Lien vs. Levy

A tax lien is a lien imposed on property to secure payment of taxes. The federal government tax lien in the United States is imposed for any kind of federal tax including but not limited to income tax, gift tax, or estate tax. A tax levy is an administrative action by the IRS to seize property to satisfy a tax liability or lien.

When, What & How of tax levies

An IRS levy can be placed on wages, bank accounts, social security payments, accounts receivables and in some cases personal residences. It is the most feared weapon that the IRS uses against a delinquent taxpayer and against taxpayers in serious debt. The IRS can levy assets that a taxpayer has in their possession or they can execute the levy on a third party such as a bank, brokerage house or any other entity or person who owes the taxpayer money. A levy can be issued without a court proceeding but not without notice to the taxpayer and opportunity for a hearing. This is a right guaranteed by the Fifth Amendment of the constitution. The hearing must be held before a neutral impartial hearing officer. The taxpayer may raise challenges to the tax debt collection actions, seek innocent spouse relief and present alternative IRS tax collection actions such as installment agreements, or offer a tax debt settlement. Under some circumstances, the underlying tax liability is disputable.

Do you need a lawyer?

Tax law is complicated. This is an area where representation by an attorney or at least consultation with one is advisable early. An attorney may prevent your tax situation from getting to the serious level of you needing tax levy help. Lawyers represent the taxpayer at the levy hearing and later if you have to appeal to a tax court or the federal district court. The IRS also has taxpayer advocates that can assist in some issues regarding taxpayer debts. The taxpayer advocate is an independent office within the IRS that can assist with tax problems or issues in which the taxpayer believes an IRS policy or procedure is creating undue harm or not working as it should.

If you are in need of legal assistance for tax issues, consult with a tax attorney in your area to discuss the details of your case..

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