Tax Levy

The IRS issues a notice of it to the person’s bank. This notice requires the bank to freeze the party’s assets for twenty-one days. During these twenty-one days, the taxpayer or their representative can negotiate with the IRS for release of the levy. If no compromise is reached, after twenty-one days the money in the accounts remits to the IRS.

The Federal Payment Levy Program (FPLP) allows for certain Social Security (SS) benefits to be subject to an IRS tax levy. In fact, all benefits described in the Social Security Act, Title II, may be levied, which includes, Survivors, Disability Insurance, and Federal Old-Age Benefits. To pay a tax liability, a 15% IRS tax levy may be assessed on any or all of these payments.

The IRS will not release an income levy unless a taxpayer resolves his or her back tax liability. The taxpayer can resolve his or her back tax liability through Full Payment, an Offer in Compromise, an Installment Agreement, or through placement in Currently Not Collectible status.

Any money deposited after the receipt of the levy is not frozen by the levy. The taxpayer should have full access to the deposited funds. The IRS can only get any subsequent funds deposited by a taxpayer after issuing another bank levy.

Thus, for the most part, a taxpayer does not need not engage in any special process to release an income levy. However, a taxpayer does need to respond quickly to any IRS requests for documents, so that their case can be resolved before the a levy is imposed.

Most likely due to the constitutional division between state and federal government that, by and large, characterizes United States law, taxpayers often presume that federal organizations, such as the IRS, cannot infringe upon state taxes. This intuitions is, in many cases, false. The State Income Tax Levy Program works with a variety of states in the U.S. to redirect state tax refunds from the taxpayer’s doorstep to the IRS. By sifting through its list of negligent taxpayers and applying that to citizens who are due a state tax refund in compliant states, the IRS can levy state tax refunds directly, in those cases where it can.

If you cannot afford to pay your entire balance you will want to apply for an installment agreement. Those who decide to avoid paying altogether will deal with ongoing levies, as well as the possibility of facing a tax lien.

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