Tax Levy

A Tax Levy is a legal seizure of a taxpayer’s property or assets by a government authority to satisfy an unpaid tax debt. Unlike a tax lien - which is a claim against property - a levy actually takes possession or garnishes assets such as bank accounts, wages, or physical property. Tax levies are enforced by tax agencies like the IRS or state tax authorities after attempts to collect taxes owed have failed.

The levy process is a powerful collection tool but requires due process, including notices and the opportunity to appeal.

Key Facts

• Enforcement Action: The government can seize assets or garnish income to collect unpaid taxes.
• Follow-Up to Tax Lien: A levy usually happens after a lien is filed and payment is not made.
• Types of Levies: Can include bank levies, wage garnishments, property seizures, or vehicle repossession.
• Notice Requirements: Tax authorities must send notices before a levy is executed, typically 30 days prior.
• Appeal Rights: Taxpayers have rights to appeal or request a payment plan before levy action.

1. What is the difference between a tax levy and a tax lien?

A lien is a legal claim on property, while a levy is the actual seizure or garnishment of assets to pay a tax debt.

2. How can the IRS levy my wages or bank account?

After providing notice, the IRS can order your employer or bank to send part of your wages or funds directly to them.

3. Can I stop a tax levy?

Yes, by paying the tax debt, setting up a payment plan, or filing an appeal within the notice period.

4. What types of property can be levied?

Bank accounts, wages, real estate, vehicles, and other personal property can be subject to levy.

5. Does a tax levy affect my credit score?

The levy itself doesn’t directly affect your credit score, but unpaid taxes and liens can impact credit indirectly.