Other than the fact that the IRS is seizing your hard earned paycheck or your entire bank account, the average taxpayer does not know some key facts about IRS tax levies, especially if it is now affecting your life.
Here are some facts you should be aware of:
1. You cannot be fired because of a federal tax levy. If an employer starts to threaten you, remind that person of 15 USC 1674. The employer can be fined or imprisoned for not more than one year or both. A stiff warning for the employer.
2. A hold period on a bank levy is 21 days. The bank is not permitted to turn any funds over to the IRS until the 22nd day.
The reason for this is to allow the taxpayer to try to obtain a release of the levy. This is accomplished by calling the IRS, making sure all tax returns are filed up to date and to provide the IRS with a valid financial statement.
With those in order, the IRS can make a decision on how to close your account. They will usually close your case with an offer in compromise, a payment agreement or determine you are currently in a hardship.
3. The Wage Levy is a continuous levy. It attaches to all future payments until the levy is released. Also included are bonuses, fees, commissions and other creative ideas to give you a paycheck.
4. The levy period begins with the time, place and date of service of the levy. What this means is that a federal tax levy only goes in effect at the exact moment the institution or entity receives the levy.
A good example of this is as follows:
If a bank receives a tax levy at 2:00 pm, all funds are literally seized or frozen when the levy actually hits the account.
If later that day a deposit goes into the account, that money is free of the levy. If this were not the case it would be a continuous levy.
5. Amount that is exempt from the levy. A part of the individual wages and salary is exempt from the tax levy.
The weekly exempt amount is the total of the taxpayers standard exemption and the amount deductible for exemption on the income tax return for the year the levy is served. That total is divided by 52.
Important reminder: The amount that the taxpayer needs to pay court ordered child support is exempt.
Killer facts about IRS Bank and Wage Levies – Former IRS Manager
