If you have unpaid taxes, the IRS may impose a tax levy to collect what you owe. Unlike liens, which are claims against your property, levies entail the actual seizure of property to satisfy tax debts. Knowing what property may be subject to these levies is important for your financial security.
Bank account levies
The IRS can implement a bank account levy, which permits them to freeze and seize funds directly from your bank account. The bank must hold the funds for 21 days before transferring them to the IRS. This waiting period provides a brief window to resolve the debt or demonstrate a financial hardship.
Wage garnishments
Wage garnishments enable the IRS to deduct a portion of your paycheck. The IRS sends a notice to your employer, who then withholds the specified amount and remits it to the IRS. This process continues until you settle the debt in full or make alternative arrangements.
Property seizures
In severe cases, the IRS may confiscate physical property such as real estate, vehicles, or valuable personal items. The IRS then sells the seized property and applies the proceeds to your tax debt.
Social security levies
The IRS can also levy Social Security benefits, typically taking 15% of each monthly payment. However, it’s important to note that certain benefits, such as Supplemental Security Income (SSI), are generally exempt from levy.
Take action
Grasping the different types of tax levies and their implications can help you manage your financial situation more effectively. Staying informed and proactive can significantly impact your ability to address and resolve tax-related issues before they escalate. Immediate action can help mitigate the impact and protect your financial health if you face an IRS levy.