How the IRS Collects on Your Back Taxes When You Owe the IRS
The U.S. government can utilize a number of different types of IRS levies to collect on your Tax Debt if you are indebted to the IRS. Naturally, you will get a lot of notifications ahead of time well before IRS Levies are executed, but it's in your best interests that you be aware of the different ways the IRS can make up for the Tax Debt amount you Owe the IRS, if you choose to pay no attention to these warnings of your delinquent Tax Debt.
IRS.gov Levy Warnings
After the total monies owed to the IRS has been assessed and calculated, and they have mailed you a "Notice and Demand for Payment" for what you owe the IRS can the United States government execute an IRS levy. Also, the final notice must have been postmarked at least one month before the IRS Levy was enforced. An IRS Levy will be issued on virtually any of your personal belongings to recoup the Tax Debt that you Owe the IRS. The 3 major types of IRS Levies the US government may use to recoup the Tax Debt that you Owe the IRS are defined here for you.
IRS Levy on Your Liquid Assets
It is perfectly within the IRS' rights to seize the available cash currently sitting in your savings and checking accounts to cover a Tax Debt you Owe the IRS. The IRS will first alert your bank of their plans to issue a Levy because of your belated IRS Tax Debt; your financial institution is legally obligated to fulfill the IRS Tax Levy. For twenty one days, your money is then moved to an escrow account. During this time, you should consult with a Tax Debt professional to either get the IRS Tax Levy discharged or pay off the Tax Debt you Owe the IRS through any other means, for ex.: credit cards, loans, borrowing from friends and family. The IRS.gov Tax Levy can be implemented to cover your IRS Tax Debt if within these about three weeks, you're not able to come to a payment agreement with the U.S. government on what you are indebted to the IRS.
IRS Tax Levy on Your Salary
The IRS can have a tax levy placed on your income and state tax returns. The IRS will definitely try to contact you several times beforehand, but should you ignore the IRS, an IRS.gov Levy on your income to satisfy your Tax Debt will be applied. Your place of employment will first get a letter from the government alerting them of their IRS Levy on your pay to apply to what you Owe the IRS, and similar to an IRS.gov Levy on your Financial Institution, your employer legally has to withhold a portion of your income and mail it to the government as payment on what you Owe the IRS. The IRS will roughly seize between 50% to 75% of your salary to apply towards your Tax Debt, leaving just enough to cover your basic needs (food, rent, and so on).
IRS Levy #3: Your Assets
The third most commonly used www.IRS.gov Levy to collect what you owe is the property levy. The United States government takes your properties using this IRS Levy, and sells them in order to apply to the Tax Debt you Owe the IRS. An IRS Levy on your house is the most commonly used IRS Levy on properties, though the IRS can also claim and sell your jewelry, boats, vehicles, etc., to satisfy your Tax Debt. In essence, anything that can be sold and is of value is used to repay what you Owe the IRS. The US government again will send you a warning of its intent to execute a Levy on your assets thirty days before the www.IRS.gov Levy to cover your Tax Debt is really enforced. During this time, you should try to work out an agreement for a payment plan that will satisfy your IRS Tax Debt before your assets are sold.
Tax Levy Discharge
Only when you have paid your whole Tax Debt in full, you have successfully negotiated a repayment agreement with the IRS to cover your Tax Debt, or the ten-year Statute of Limitations for the U.S. government to recoup your IRS Tax Debt has run out can an IRS Levy for the Tax Debt you Owe the IRS be lifted.