Did you receive a levy?
Internal Revenue Service more commonly referred to as the IRS is not a name that any of us like to hear about and certainly don’t like hearing from them! They are seen as the financial enemy by most unless you’re one of the millions that gets an annual refund. When you hear the term “IRS levy”, that is not good news and can be devasting for the person that has been notified of an irs levy on wages.
What exactly is an IRS levy though? The Internal Revenue Service is authorized to levy a taxpayer’s wages by authority of the Internal Revenue Code (IRC) in order to collect delinquent taxes. This can include any property in addition to wages that belongs to a taxpayer. The IRS has procedures and steps they must take before an IRS levy can be implemented, showing they have just cause for such action.
IRS levy can take place when a taxpayer doesn’t pay their taxes or make payment arrangements to pay the tax debts. If the IRS determines that an IRS levy is an appropriate action, the IRS levy may include any of the following property or right to property that is in possession of others, not listed in any particular order:
- Retirement accounts
- Bank account
- Rental income
- Accounts receivables
- Cash loan value of life insurance
- Seizure of physical property like boats, cars, homes
Does the IRS have to notify you of a levy?
Yes, even though the IRS has a lot of legal power, an irs levy without notice is not legal. The law requires that the IRS gives a taxpayer proper notice before an IRS levy can confiscate any bank account. According to IRC (Internal Revenue Code), Section 6330, it is required of the IRS to notify the taxpayer in writing before implementing a levy. The notice must provide the taxpayer information on their right and the process of appealing the collection action. That appeal must take place within thirty days of the notice’s date, not thirty days of the taxpayer receiving the notice.
How much can the IRS levy from your paycheck?
When IRS levy is issued, the agency will send the taxpayer’s employer a notice with Form 668-W. This requires the business to send a determined amount of their wages direct to the IRS. That amount is determined from the taxpayer’s exempt amount using their filing status, pay period and the number of dependents they are allowed to claim. For instance, a single taxpayer with no dependents to claim with an income before withholdings of $1,000 every two weeks, as much as $538 can be garnished by the IRS.
In addition to being able to garnish the taxpayer’s wages, an IRS levy can include any bank accounts and Social Security income as well as accounts receivable. The IRS determines the amount to be the levied toward paying on back taxes. The taxpayer is not given any options at point once an IRS levy has been implemented.
Does IRS notify you before garnishing wages?
It is of common opinion that the IRS has unlimited powers, and to some extent, that may be true. However, there are tax laws that the IRS has to follow just as taxpayers must, including IRS levy and wage garnishment. The IRS must give a taxpayer an advance warning before they can begin garnishing their wages and if the outstanding balance of back taxes are paid in full during the given time frame, wage garnishment is stopped.
Can the IRS garnish your entire paycheck?
In general, and IRS levy will not garnish a taxpayer’s entire paycheck, unless that taxpayer as multiple jobs, then an IRS levy may include garnishing all of the wages earned from one of the employers. They will also garnish any bonus, commission, or incentive pay that is apart from the taxpayer’s usual paycheck.
How do I stop an IRS levy?
If you know you owe back taxes, it is important to understand how irs levy works and what rights you have as a taxpayer. The first crucial step in being a taxpayer is to file your tax returns on time and pay any IRS taxes when due.
You can request an extension if you aren’t prepared to file your tax return and if you aren’t able to pay the amount owed, pay what you are able and request a payment plan. Being proactive is key to keeping an irs levy and seizure notice out of your life.
The IRS may seem like the enemy to taxpayers, but in reality they are not the enemy. The money that the IRS receives, our tax dollars, go to good use that we all receive. This money funds Medicaid, Medicare, and Social Security. Our tax dollars paid via the IRS also fund the country’s national defense, foreign affairs, and least but not last, aid for the veterans that have served our country. Our tax dollars also pay for development in our communities, our local and state law enforcement and other services provided by the American government. Call 817-905-1040 today for your IRS levy help.