Tax Levies & Liens
There are two different types of tax levies. First there is the 668 (W). The 668 (W) is used to levy an individual’s wages, salary or other income. Other income is that owed to the taxpayer as the result of personal services in a work relationship. The 668 (A) is used to levy other property that a third party is holding. Other property included bank accounts and business receivables for self-employed people.
What is a Bank Tax Levy Holding Period?
A bank levy holding period is a 21 day period of time whereby a bank holds levied funds prior to releasing those funds to the IRS. The reason for the 21 day holding period is to allow the taxpayer to make a hardship argument to the IRS that may result in a release of some or all of the money that the IRS levy has attached to. After 21 days, if there is no levy release, then the proceeds that were in the bank account at the time the levy was received by the bank will be forwarded to the IRS. All money deposited in the bank account after the levy had been received by the bank will be available to for taxpayer’s use.
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What is an IRS Tax Lien?
An IRS tax lien is a legal claim against your property when you neglect, fail or are unable to pay back taxes. An IRS tax lien protects the government’s interest in all your property, including real estate, personal property and financial assets. An IRS tax lien exists after the government:
- Assesses your tax liability;
- Sends you a bill that explains how much you owe (Notice and Demand for Payment); and
- You neglect, refuse or are unable to fully pay the debt in time.
The IRS files a public document, the Notice of Federal Tax Lien, to alert creditors and all others that the government has a legal right to your property.
Lien vs. Levy
A lien is not a levy. A lien secures the government’s interest in your property when you don’t pay your back taxes. A levy actually takes your property to pay the tax debt. If you don’t pay or make arrangements to settle your tax debt, the IRS can levy, seize and sell most types of real or personal property that you own or in which you have an interest.
Please feel free to contact us regarding your Tax Lien. Every tax matter is unique because every person’s situation is unique. We can quickly and efficiently analyze your circumstances and propose various options of resolution.