A tax levy (and its cousin, the tax lien) is serious business if you owe back taxes. Here’s how a tax levy can affect you, as well as how to remove a tax levy.

A tax levy is the seizure of property to pay taxes due. Tax levies can include penalties such as garnishment of wages or seizure of assets and bank accounts. Some objects cannot be entered. Tax levies usually appear after the government has placed a tax lien.

A tax lien is a claim that the government makes on your property, including real estate and other assets, when you are in arrears on your income taxes, and a levy is the exercise of that claim. (If you’re wondering how long it may take before the IRS finds you haven’t paid your taxes, read it.

How a tax levy can affect you

Here are some things that could happen if you are affected by an IRS levy.

  • Your salary may go down. Garnishment of wages is a common tactic. This means that your employer must pay a portion of your income each payday.

  • Your bank accounts could be frozen. Bank accounts are prime targets for collecting tax arrears. Typically, the IRS contacts your bank and places a 21-day hold on your account. If you haven’t settled things with the IRS after that date, the bank may send some or all of your money to the IRS.

  • Your home could be in danger. “Usually they don’t want to buy your house because it’s bad publicity,” says David Klasing, CPA and tax lawyer in Irvine, California. “It’s a last resort, but I saw it coming.” Some objects cannot be entered. For example, the IRS says it cannot seize unemployment benefits, certain annuities and retirement benefits, certain disability payments, workers’ compensation payments, certain public assistance payments or child support payments. children. Undelivered mail, some items needed for school or work, and some furniture and household items are usually off the table as well.

Take charge of your financial life now

How to get rid of a tax lien or tax levy

  • Pay your tax bill. It sounds obvious, but in most cases paying your back taxes is the only way to end a tax lien or levy. “The most important thing I can tell you is to cooperate with the fundraising action. If they ask for something, you give it to them. If they contact you, go back. Communicate with them, ”Klasing says.

  • Adopt an IRS payment plan. Your tax balance will still accumulate interest and penalties until it’s paid off, but if you allow the IRS to take at least three consecutive payments directly from your bank account (called a direct debit agreement), you could convince the IRS to remove the lien from the public record. (You’ll still have to pay your tax debt, of course.) You don’t have to hire someone to put you on a payment plan – you can apply on the IRS website. Fees vary from $ 0 to $ 225 depending on the plan and your income.

  • Ask for an offer in compromise. This is a claim for payment of your tax arrears that are less than the total amount you owe. Please note: the IRS generally accepts less than half of the requests it receives in a year. To be considered, you must have filed all of your tax returns and made the estimated tax payments required for the current year. You will also not be considered if you are bankrupt or if you are audited. (Learn more about how to do it here.)

  • Appeal. You can request a due process hearing with the IRS Appeals Office if you want a review of a lien or levy notice. Additionally, if you disagree with an IRS employee’s decision regarding a lien or royalty, you can request a conference with the employee’s manager. If you disagree with the manager, you can ask the Appeals Office to review your case.

  • File for bankruptcy. It’s not a great option, but in some cases it can get rid of tax debt. However, it’s often a long process, there are a lot of rules and it doesn’t always work, Klasing warns.

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