Levy

What is a levy?

Nearly every business and working individual in the U.S. is required to pay federal taxes, including income tax. You can choose to have taxes deducted from your paycheck or pay them on your own.

If you don’t pay your taxes, the Internal Revenue Service (IRS) can issue a lien and notify you of the intent to levy. If you don’t pay the tax debt (or set up a payment plan) after the lien is issued, the IRS can seize your property, wages, car, retirement accounts, or any other assets until the tax debt is paid in full.

FAQs

Can you contest a levy?

You have the right to appeal a levy before or after it has been imposed. The earlier you do it, the better. If you wait until after the proceeds have been sent to the IRS, you’ll have to file a claim to have your assets returned to you. You can also request a levy release if the levy would cause immediate economic hardship. 

When can the government impose a levy?

If the IRS has sent you a tax bill, a demand for payment, and a levy notice, and you still do not pay your tax bill, they can impose a levy to collect unpaid taxes. They have to send you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) 30 days before the levy. 

What happens after a levy?

After the levy is imposed, the IRS will sell your property based on an assessed value and apply the proceeds to your tax debt. If there is any leftover, they will let you know how to get a refund. 

What’s the difference between a lien and a levy? 

A lien is a precursor to a levy. If you fail or refuse to pay your taxes after a certain period of time, the IRS can place a federal tax lien on your property as a signal to creditors that the IRS has a legal claim to your property. If you still don’t pay your tax debt, they can impose a levy and seize your personal property.