Source: ezinearticles.com
A tax levy is a legal procedure in which a home or other asset is seized in order to pay a tax debt. This is not usually the first step in recovering back taxes, but something that you need to be aware of if you are falling further behind as each month goes by. Many people believe that a tax levy and a tax lien are one in the same; this is not the case. Simply put, a lien is placed on the home for security for the debt. With a tax levy the property is actually taken from the owner.
If you do not pay your taxes the IRS may have no option but to enforce a tax levy, and then sell off the property to recoup their money.
When does the IRS turn to the tax levy process?
In most cases, if the following three steps are taken, and the tax is not paid, the IRS and most States begin to move forward:
1. A Notice and Demand for Payment has been sent after the tax has been assessed.
2. You have neglected to pay what you owe.
3. A Final Notice of Intent to Levy and Notice of Your Right to a Hearing is either hand delivered or left at your home.
It is important to be aware of the different types of tax levies. The IRS has the ability to levy your wages, bank account, 401k, social security, federal payments, or state refunds.
When the IRS decides to seize your assets they will start by contacting anybody who may be paying you or holding your money; this includes your employer and bank. In turn, you can expect them to cooperate because they don't want to be liable for the money. As you can imagine, it can be quite embarrassing for your employer to know that your wages are being levied.
Additionally, a tax levy can be listed on your credit report. In turn, this will greatly affect your chance of obtaining a loan, credit card, etc. To go along with this, a levy will also negatively impact your credit score.
As you can see, a tax levy is serious business. If the IRS decides to move forward with a levy you could end up losing your home, or having money taken from your wages, bank account, etc. As always, with the IRS and the complex code and procedures, it is best to work with a tax professional to get the best outcome.
For more information on an IRS tax levy and or state tax levy and how you get stop it or get it released visit backtaxeshelp.com.
