A levy may be used to collect tax debt

On Behalf of | Mar 27, 2020 | Back Taxes or Tax Debt

Numerous Connecticut residents struggle to pay their taxes every year. If they let their tax debt grow year after year without making any payments, the Internal Revenue Service may issue a levy to collect. What does a levy do, and can one stop it?

A levy is a legal right to seize property in order to collect a debt. The IRS cannot issue a levy whenever it pleases. The following three requirements must exist in one’s case before the IRS can take one’s property:

  • Demand for Payment was sent to the taxpayer
  • The taxpayer neglected to pay
  • Levy notice sent to the taxpayer 30 days before property seizure

After receiving a levy notice, one has the right to a hearing. If one fails to attend a hearing or pay off the debt, the levy will proceed. If it does, the IRS has the right to:

  • Garnish wages
  • Dip into one’s retirement accounts
  • Take funds from one’s bank accounts
  • Seize rental income
  • Seize and sell one’s vehicle and/or house

Some property may be exempt from IRS seizure, but most of it is fair game. The only way to stop a levy is to pay the tax debt, either in full or through installation payments, or to fight the IRS about how much is owed. Legal counsel can review the details of one’s situation and help one decide the best way to address it. With the right assistance, Connecticut residents can deal with any tax debt appropriately and hopefully spare their property in the process.