An Internal Revenue Service (IRS) levy is a garnishment of wages, additional assessment of income taxes or government payments like social security and disability. A levy can also refer to the ability of the IRS to claim monies owed by seizing your bank account or by selling your assets. An IRS levy can occur as early as ten days after a demand for payment on taxes owed. Normally, one can avoid a levy by proposing and sticking to a reasonable payment plan.
The IRS tends to employ a levy when people either ignore requests for payment of taxes or don’t stick to proposed payment plans. If a tax debt is very large, a proposed payment plan may simply be too modest for the IRS and they may choose to levy your earnings or assets. Usually, the IRS is willing to work with people who owe tax debt because it is much less expensive to have a debt collected over time. The IRS can, however, levy fees and fines or interest if a debt needs to be paid off in payments.
Once the IRS has chosen to levy a bank account or wages, there are few choices left for the person. It is usually at this stage that making payment plans is most difficult and the IRS is most likely to do whatever they wish with money you earn. This can leave some people without sufficient means for support.
The key is to avoid an IRS levy is by working with the IRS from the start if one owes a tax debt. Alternately, when one owes a very large tax debt, one may want to consider hiring a lawyer to work as mediator in establishing a reasonable payment plan. Delaying working with the IRS is generally the most common reason for the IRS to levy wages or property.
Other collection agencies of the federal government are also empowered to levy wages, refunded taxes or social security and disability payments. For example, unpaid student loans that remain unpaid can result in wage garnishment or deductions from tax refunds. Again working with the government agency to which one owes money is often the easiest way to remain in control of one’s earnings and assets.
