State Levy Meaning | State Tax Levies | Tax Levies Meaning | Tax Seizure Of Property

State Levy Meaning | State Tax Levies | Tax Levies Meaning | Tax Seizure Of Property

Have you received a Notice and Demand, Notice of Intent to Levy, or Notice of a right to a Collection Due Process Hearing? If so, you are in the process of losing funds directly from your bank account. Specific IRS protocols must be followed, however, if successful, that amount in your bank account is essentially frozen for 21 days before being sent to the IRS.

Levies usually are the result of poor or no communication between the taxpayer and the IRS. The IRS or State is required to serve notice before taking on levy actions. For the IRS this is done by the use of specific notices in a defined order. The taxpayer will receive a series (up to four) balance due notices CP501 CP503 . The next notices will be a CP504 CP504B – Notice of Intent to Levy and Notice of Your Right to a Hearing. The next notice will be CP90 “Final Notice of Intent to Levy and Notice of Right to a Hearing.

A levy by either the IRS or the State is the actual seizure action taken to collect an IRS or State debt. The IRS or State can issue a bank levy to seize funds from a bank account. The IRS or State can also levy wages, accounts receivable and other sources of income. The person, company, or institution that is served with the levy notice, must comply or face legal issues and severe penalties. The receipt of this notice usually causes the taxpayer’s relationship to suffer with the person being levied. We have seen numerous times where it has lead to termination of the employee. In several industries (financial services, banking, etc), if the employer receives this notice, it likely will lead to the termination of the employee.

Don’t Ignore an IRS Collection Notice, Unless You Want Them to Levy Your Bank Account
Notice the consistent theme above regarding the notices. Each provides an appeal process. You ABSOLUTELY MUST file an IRS Collection Appeal request within a certain legal time frame or risk losing your opportunity to appeal.

NOTE: At Legacy Tax & Resolution Services, LLC, we will review your IRS collection letter(s) let you know up front what tax relief options are available for resolving your specific IRS problem(s). The minute you retain us, you no longer have to communicate with the IRS.

Bank Levies

When the IRS levies a bank account, the levy is only for the particular day the levy is received by the bank. These are generally referred to “one time” levies.
The bank is required to remove whatever amount is available in your account that day (up to the amount of the IRS levy). Once removed the amount is held for 21 days before being sent to the IRS or State.

NOTE: During this 21 day period, we have the opportunity to explain why this levy would be an economic hardship on you the taxpayer. As you might imagine, this is no easy task. Our tax specialist would quickly gather the necessary info to determine the level of hardship.

This type of levy does not affect any future deposits made into your bank account unless the IRS issues another Bank Levy.

Levy Release

Under certain circumstances, bank levies can be released or mitigated with other IRS programs. Economic hardship can be claimed if you cannot meet basic living expenses, Installment Agreements can be negotiated or an Offer in Compromise can be put in place to stop the immediate effect of losing the cash on hand in your bank account. Levies that did not follow the due process can be immediately released. Credit card payments may be an option and an “Appeal Request and Collection Due Process Request” can be implemented.

For addition information, please see Frequently Asked Questions- IRS Bank Levy

If you feel that you can handle this on you own but perhaps need some guidance, check out our DIY site for the

DIY Stop IRS Levy or asset seizure Guide

If you feel like you’re in over your head and need representation, check out the link below. There you will be able to reach out us for one of our Tax Resolution Specialists to take this burden off your hands