A tax or IRS levy is an administrative action by the IRS under its statutory authority to legally seize property to satisfy a tax debt. This is in contrast to a lien which is a legal claim against property to secure payment of the tax debt, while a levy actually takes the property to satisfy the tax liability. Obviously, an IRS levy is a frightening proposition to most, if not all, taxpayers.
Note that no court permission is necessary for the IRS to levy property. Rather, §6331 of the Tax Code (Internal Revenue Code or “IRC”) provides statutory authority and authorizes levies for the collection of delinquent taxes. Unless the IRC exempts the property from levy, any property or right to property can be levied. Of course, property encumbered by a Federal tax lien may also be levied.
The Fifth Amendment of the U.S. Constitution prohibits all governmental bodies from taking property from any individual, like an IRS levy, without due process. To meet constitutional requirements, the IRS must therefore provide a taxpayer with notice of the pending levy and an opportunity to be heard. Under §6330(a)(2), the IRS must send to the taxpayer a notice by either personal hand delivery, or certified mail, and such notice must arrive at least thirty days prior to the seizure.
The IRS must meet three requirements to levy property. First, it must have assessed some tax and sent a Notice and Demand for Payment. Then the tax must not have been paid, whether by neglect or refusal, resulting in the IRS sending a Final Notice of Intent to Levy and Notice of Your Right to A Hearing at least 30 days before the levy. This is the notice mentioned in the preceding paragraph required to meet standards of due process.
Taxpayers that fail to pay taxes or make arrangements to pay or settle this debt, will subject themselves to the possibility of an IRS levy. The IRS may levy any property or right to property taxpayers own or in which they hold an interest. Examples of the latter are wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions. Of course, the IRS can also seize and sell property taxpayers hold outright such as a car or house.
If you have received an IRS Notice and Demand for Payment and/or Final Notice of Intent to Levy and Notice of Your Right to A Hearing, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation call 212-490-0704.
