- February 4, 2018
- Posted by: ajain
- Category: Solutions
A levy is a legal seizure of property, or rights to property, done to satisfy an existing and outstanding tax debt. Imagine the IRS assessed that you owed them $20,000. They sent you a Final Notice of Intent to Levy and a Notice of Your Right to a Hearing, which you ignored or refused to comply with. They could come to your house and seize your vehicle assessed to be worth $18,000 leaving you with a final tax debt of $2,000 plus interest and penalties based on how slowly you pay it off.
A levy can take many assets such as wages and salary, bank accounts, retirement accounts, and physical property such as homes and vehicles. Certain property cannot be levied, such as unemployment benefits, certain pension benefits, certain service-connected disability payments, income for court-ordered child support payments, and minimum weekly exempt income. Property can only be seized if the government expects the net proceeds to help pay off the debt.
A levy can be released if the amount owed is paid off or collected, the period for collections passes, it will help you pay what is due, you enter into an Installment Agreement, or the levy creates an economic hardship preventing you from meeting basic reasonable living expenses.
Levied real estate can be recovered if you, and any other party with interest in the property, pay the purchaser what they paid, plus interest at 20% annually that is compounded daily. This can only happen within 180 days of the sale.