The IRS is the most effective collection agency in the world. While you may receive threatening letters and hassling phone calls for other debts, a tax debt can completely ruin your life. The IRS can and will take any of your money they can find. An IRS levy can come after just about any income you have. This page will discuss levies on bank accounts and wages.
IRS Levy on Bank AccountsAn IRS levy can happen to any sort of depositary that has your name on it and that you can access. This includes, but is not limited to:
- Credit Unions
- Savings and Loans
The IRS is required by law to mail notices to the taxpayer's address on file before an IRS levy can take place. However, an IRS levy on bank accounts often takes you by surprise. Sometimes, this is because the address on file is old or incorrect. Many times, however, it is because the taxpayer has ignored the notices and the last letter is sent to the institution you bank with.
An IRS levy can happen to several accounts simultaneously. When an IRS levy is against a bank account, it will attempt to take the full amount of your tax debt. If your tax debt is greater than what is available, everything in your account will be taken. The amount chosen for the IRS levy will be frozen for 21 days. If you cannot prove hardship during that time, the IRS will collect that money plus any interest that accrued. The IRS can then choose to do an IRS levy against your accounts again.
IRS Levy on WagesAnother IRS levy that can take you by surprise is the wage levy. This is because it is usually your boss or payroll department that informs you that an IRS levy has been placed against your wages. How an IRS levy on wages works depends on how you earn your money.
IRS Levy on W2 EarnersIf you are a W2 wage earner, the IRS figures out an amount that they will leave you with to survive on. What you are left with depends on the following factors.
- The Filing Status you use on your tax return.
- Exemptions you are allowed to claim on your W4.
- The standard of living costs recognized by the IRS that year.
Keep in mind that the standard of living is based on national standards. If you live in a more expensive state or city, it won't matter. What you can expect to take home every month ranges from $791 as a single taxpayer to $3,200 as a blind jointly filing taxpayer with 6 allowable W4 exemptions.
IRS Levy on 1099 ChecksIf you receive 1099 checks as income, your entire check will be taken in an IRS levy. It can happen to several checks simultaneously. So, it is entirely possible that you will not bring home a single penny in a month.
If you file jointly or if you live in a community property state, your spouse is also subject to an IRS levy on bank accounts or wages. In order to prevent or stop an IRS levy, you must either pay off your tax debt or enter into an official IRS agreement. If your tax debt problems are serious enough that an IRS Levy is even a possibility, you need to get help from a tax debt professional.
Need help preventing or stopping an IRS levy? Consult a professional. Call now or fill out the form below for a free tax debt consultation to get real advice on ending an IRS levy! We'll only connect you with a tax debt relief company holding at least a B rating with the Better Business Bureau.