How a Tax Levy Can Affect You

“Tax levy” is probably one of the most dreaded phrases in the English language, and, once you understand what it is, it’s easy to see why. A tax levy is a measure enacted by the IRS to collect on money that you owe. It can take different forms, such as the garnishment of your wages, or the seizure of an asset you possess, like a piece of property or the money in your savings account. In order to be affected by a levy, you’d first have to owe unpaid back taxes, but, once you do, and once you’ve been notified as such, watch out! Tax levies are serious business.  

It Won’t Happen Out of the Blue  

The good news is that a tax levy shouldn’t catch you completely unaware. As long as your contact information is current with the IRS, you should have received plenty of warning that a levy was possible. In fact, the IRS can’t and won’t issue a levy unless it has first informed you that you owe money and then, upon your lack of payment, sent a notice of intent to levy. Even after this notice, you still have a month to appeal the IRS’ decision. But, if you don’t act, then a levy is entirely possible and likely.  

Paying is the Easiest Way Out  

As you can imagine, a tax levy can be incredibly devastating. But, there is one easy way out: pay your tax debt in full. If you can’t do that, then your next best option is to contact the IRS to try and work out an installment agreement or other solution. However, the IRS is more likely to work with you if you contact them before a levy has actually been enacted, so the quicker you take action, the better. Of course, that information doesn’t help you much if you’re already facing a levy and its consequences. In this case, reach out to a tax professional who can help you to explore different options to lift the levy. Or, if you've simply received notice of the intent to levy, work with an expert to keep the levy from actually happening. Remember, the IRS uses a levy as a last resort, so it’s always best to not let one occur in the first place.