A bank levy is essentially the freezing of the funds in your bank account at the time the levy is processed by the bank. A bank levy does not capture all the funds going into that account indefinitely. Once the funds are frozen the bank holds the money in escrow essentially for a period of 21 days before sending the funds to the IRS.
During this 21-day period, you have an opportunity to resolve your account in another manner and have the bank funds returned to your account for available use. Once money has been sent to the IRS, your chances of getting it back reduce significantly.
Wage garnishments and how quickly they are processed depend on your employer and the frequency of your pay schedule. Typically, you will see these going into effect no later than two pay periods following receipt of notice by your employer. A wage garnishment can legally leave you taking home as little as $862 a month after the garnishment comes out.
If your employer receives a wage garnishment from the IRS, they should provide you with a form to fill out showing the exemptions you claim when filing your tax return to determine what amount of your wages is exempt from garnishment.
A wage garnishment is ongoing until the IRS issues a release to your employer. In order to obtain a release if you are not paying the tax you owe in full, you must set up a payment plan or establish a hardship with the IRS.
If you receive Social Security income, the IRS can garnish 15 percent if it is your only income and up to 85 percent if you have other income sources.
Seizure of Assets and Property
A levy can also include the seizure of your assets, including your retirement accounts, state and federal income tax returns and stock accounts, and property, such as your home, car or boat.
The IRS will never levy you without notice. There are, in fact, several letters that will be mailed to your address on record prior to a levy actually occurring. If you are reading these letters, the one prior to levies being issued clearly tells you that levies will be issued if you do not make other arrangements.
Once the IRS issues a levy, you can work with the organization to stop the levy. Here are some options to explore:
- Request an extension on your back taxes
- Make an agreement to pay your unpaid tax balance with an installment plan
- Submit an Offer in Compromise to settle your debt for less than you owe
- Establish a hardship with the IRS to show your inability to pay
- File for bankruptcy
True Resolve is on your side.
When you are facing a tax levy, it is imperative to have experts that represent your interests and assure you of your rights. True Resolve has a long history of working directly with the IRS on behalf of clients like you. Our Denver-based team of Enrolled Agents is your best asset for understanding and resolving your tax levy.