Tax Levies

One of the laws that gives the IRS the most power is the ability to seize a taxpayer’s property by issuing a tax levy. All States have some form of tax levy, garnishment or warrant. Bank accounts, IRA’s, pension plans, wages, homes, automobiles, commissions, cash, and, with very few exceptions, all other property owned by a taxpayer, are subject to being seized by a tax levy.

The IRS, however, does have to act within certain restrictions placed on it by Congress. There are laws that are available to enable taxpayers to resist IRS and State tax levies. In addition, the IRS and most States have procedures that allow taxpayers to protect themselves against having all their property seized because they owe taxes.

The best course of action with respect to tax levies is to plan ahead so that a tax levy is never issued in the first place. Dealing with the fact that taxes are owed by taking action ahead of time, with the aid of a professional tax advisor, is certainly advisable. For example, if only the husband owes taxes, it would not be wise for his wife to deposit her paycheck into a joint account with her husband. Doing so, would subject the wife’s money to a tax levy because the money was placed in a bank account that could be accessed by the husband. Likewise, the couple would not want to place a house owned by the wife, say from a prior marriage, into the joint names of the husband and wife. This action would subject the house to the husband’s tax liability.

Many times, however, a person or business is surprised by a tax levy and first finds out about it when the bank sends a notice that the bank account has been debited on behalf of the IRS. If this happens, immediate action can be taken to limit the amount of money or property seized, or, if the money or property seized actually does not belong to the taxpayer, the money or property can be retrieved.

The key to solving the problem is a quick response to the tax levy. It should not be assumed that nothing can be done to save property levied on. However, it should not be assumed that the levy can be easily removed.

When there has been a tax levy or when one is expected, tax advice should be sought immediately. Joseph Falcone has been dealing with tax levies for 39 years. He can help you with your tax levy problem.