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What is an IRS tax levy, and how does it work?

how does an irs levy work

Where creditors are concerned, it’s not too hard to determine who’s Goliath among the bunch.

Indeed, that is the Internal Revenue Service. If there was a movie with a western theme called “The Creditors,” the IRS would be John Wayne-like and wear the biggest badge in town. If that movie was war–based, the agency would represent the Joint Chiefs of Staff.

The point: The IRS is a flat-out super creditor that simply does not queue up in line with any other parties when it is seeking payment on an alleged debt. The line starts with the agency, with every other creditor shuffling dutifully behind.

Those plenary powers obviously need to be respected.

A ready example of why that is the case is provided by the agency’s broad license to act when it seeks to take the property of an individual in Texas or elsewhere pursuant to a levy. An IRS website page discussing levies flatly notes that the agency “may seize and sell any type of real or personal property that

you own or have an interest in.”

That is certainly a telling — and daunting — statement. And when the agency refers to “any” property, that is exactly what it means. The subject of a levy can range from real property such as a car, boat or even a home to company wages and all types of savings accounts. It is worthy to note that the IRS commands even the singular power to tap into a person’s retirement accounts.

Thus, that need for respect. Persons targeted by the IRS for tax payments should not automatically be fearful of the IRS, though. The agency is not immune to reason, and it does not chase after resources it is unlikely to get.

There is the opportunity for meaningful and potentially material input from an experienced tax attorney at many junctures of the IRS levy process. We will focus on that in our next blog post, as well as flesh out further the key requirements — such as notice and appeal — regarding agency levies.

Category: Taxes

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