The IRS will issue a “Final Notice of Intent to Levy and Your Right to a Hearing” to taxpayers who have not resolved their IRS tax problems after receiving a series of notices demanding payment of back taxes.
The Final Notice of Intent to Levy is required by law to be sent to the taxpayer at least 30 days before the IRS can levy the taxpayer’s property. The IRS may levy almost any asset you own, including bank accounts, wages, commissions, IRAs, social security benefits and monies owed to you for services rendered as an independent contractor.
A taxpayer is given the following options when responding to the final notice:
• Pay the amount owed in full
• Make alternative payment arrangements
• Ask for an Appeals Hearing
Unfortunately, many taxpayers that owe back taxes and have received a Final Notice of Intent to Levy do not attempt to resolve their tax problem at that time, but simply choose to ignore it. Once the 30 day period elapses you can expect the IRS to take action and levy your property.
The assets most levied by the IRS are bank accounts and wages. If your bank is served with a levy it is required to hold the funds (not to exceed the owed to the IRS) in your account for 21 days before turning it over to the IRS. The amount that is frozen is limited to the balance in your bank account at the time of the levy. For example, if you deposit additional funds in your account the day after, the IRS is not entitled to receive those funds. The 21 day hold gives you an opportunity to engage a tax resolution specialist who will negotiate with the IRS regarding your outstanding tax debt and release of the levy.
If the IRS decides to levy your wages it will contact your employer who will be required to withhold a substantial portion of your wages. Unlike a bank levy which is a one-time levy, a wage levy is continuous and thus remains in effect until the tax debt is fully paid or it is released by the IRS.
If you have received a Final Notice of Intent to Levy do not ignore it, rather contact a tax professional with experience in IRS collection matters who can provide you with solutions to your IRS tax problems.