What is tax imposition?

Tax levy is a collection process used by the IRS to legally seize a taxpayer's assets to satisfy unpaid taxes.

Assets that may be seized through the taxing process include:

• Bank Accounts
• Investment Accounts
• account receivables
• Salary
• Social security
• Pension
• insurance policies
• Physical Property

What are the types of taxation?

Common tax levy types include wage garnishments, bank levies, 1099 levies, reduced tax refunds, property seizures, other asset seizures, and passport seizures. Depending on the taxpayer's situation, the IRS will use whatever method is easiest to recover the amount owed.

salary deduction

The IRS will contact the taxpayer's employer and ask them to withhold a certain percentage of the taxes owed. The payroll deduction will continue until enough money is collected to repay the debt, interest, and penalties.

Bank Levy

The IRS will contact the taxpayer's bank and ask them to place a hold on the funds to prevent withdrawals for 21 days. After 21 days, the bank must deduct the amount owed and send it to the IRS. If there is not enough money to repay the debt, the IRS may repeat the process until the debt is paid in full.

1099 Levy

The IRS will issue fees to collect the taxpayer's current (not future) 1099 payments.

Lower tax refunds

The IRS may retain money that would otherwise have been refunded to the taxpayer after filing taxes. This is true not only for federal tax refunds, but also for state tax refunds.

Property seizure

The IRS can take any taxpayer’s property, auction it off, and keep the money it receives.

Other property seizures

The IRS will also tax other taxpayer assets such as retirement accounts, stock dividends, licenses, life insurance policies, accounts receivable, and other income.

Confiscation of passport

If a taxpayer owes more than $50,000 in taxes, the IRS can request the State Department to cancel or deny his or her passport.

What is the normal tax recovery procedure?

The following normal taxation process begins well before any seizure:

• The amount of tax will be determined either by the taxpayer or by the I.R.S.
• The taxpayer will be sent a tax bill, requiring payment.
• If a taxpayer does not pay the taxes due, the IRS will send several letters stating the amount of taxes due and the due date, as well as warning the taxpayer of the consequences if he or she does not pay.
• Final warning letters will be sent from the IRS, titled “Final Notice of Intent to Levy” and “Notice of Your Right to a Hearing.”
• The taxpayer will have 30 days to pay or otherwise resolve the taxes owed before the IRS will levy the tax.

The whole process can take a minimum of three months, but could take longer.

How can I stop tax collection?

The best way to prevent tax collection is to pay the taxes owed in full on time. If this is not possible, the taxpayer can work out an installment payment plan with the IRS or try to negotiate a settlement.

If the IRS has already initiated a tax levy, the taxpayer  has the right to appeal  and stop it from proceeding. Some circumstances that may qualify for an exemption from tax levy are financial hardship or having an innocent spouse.

Can tax levy be reversed?

The IRS is required to provide a legal notice stating the time period the taxpayer has to arrange the funds, reverse the tax levy, and secure the property once again. However, returning the levied assets is much more difficult than avoiding the tax before it is due.

Generally, the IRS only reverses a levy if:

• This fee was imposed before the taxpayer was given 30 days to request a hearing.
• The IRS did not follow procedures.
• The seized property is necessary to earn income, which helps the taxpayer repay the loan.
• The taxpayer entered into an installment payment agreement.

Who do I call about tax collection?

If you are concerned that you will receive, or have already received, a notice of tax imposition, it is important to contact the IRS as well as a CPA, enrolled agent (EA) or local tax attorney for guidance.