IRS Liens, Levies and Garnishments: What to Know
If you or your business has a tax liability, the IRS can assert a lien against your property and can issue a levy against your bank accounts to collect the tax liability. There are methods to halt the unreasonable actions of the IRS to prevent them from causing disruption to your business.
When can the IRS Issue an IRS Levy?
The IRS cannot simply issue a levy without going through the proper protocol. An IRS asset seizure that was issued without going through the proper steps is called an erroneous levy. The IRS will generally seize a bank account or other asset only after these three requirements are met:
- The IRS assessed the tax and sent you a Notice and Demand for Payment (a tax bill);
- You neglected or refused to pay the tax; and
- The IRS sent you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy. The IRS may give you this notice in person, leave it at your home or your usual place of business, or send it to your last known address by certified or registered mail, return receipt requested. Please note: if the IRS levies your state tax refund, you may receive a Notice of Levy on Your State Tax Refund, Notice of Your Right to Hearing after the levy.
When can the IRS issue a Lien?
The law provides that in order for the federal tax lien to have priority against certain competing lien interests, the IRS must provide a notice of federal tax lien to you. This notice gives you appeal rights under the Collection Due Process appeal program. In order for the IRS to issue a levy and take funds from your bank account or levy your wages, the IRS must issue a final notice of intent to levy to you. The final notice of intent to levy provides you the right to appeal under the Collection Due Process program. The IRS must release the levy or lien if it causes a financial hardship or if they were issued erroneously.
Contact an IRS Tax Attorney
If you have a tax liability and are facing a potential IRS collection actions, you can obtain fast and effective relief. You may qualify for a Collection Due Process Hearing (also known as CDP hearing). Call a Los Angeles IRS tax attorney at Disparte Tax Law for a free consultation.