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Bank Levies, Wage Levies or Garnishments

A bank levy is one of the most powerful and devastating collection powers available in the IRS arsenal. The IRS doesn’t have to take a taxpayer to court to collect a debt like other creditors. The IRS simply needs to mail a series of notices to the taxpayer advising of the tax debt and notifying the taxpayer that it intends to levy the taxpayer’s accounts. That’s it. If the taxpayer doesn’t immediately pay in full or contact the IRS, a bank levy can be issued. The IRS then notifies the bank of the levy by instructing the bank to freeze all funds up to the amount of the debt in the taxpayer’s accounts and pay it to the IRS. If the bank fails or refuses it can face severe consequences. This is one of the IRS’s biggest and best weapon for collecting taxes. By levying a taxpayer’s account the IRS in effect can “strangle” a taxpayer by “choking off” its cash flow. This can be especially difficult on a taxpayer when his paychecks are direct-deposited into his bank account.

An IRS wage garnishment or IRS wage levy is a similarly devastating IRS collection method. It is a written notice sent by the IRS to a taxpayer’s employer requiring the employer to withhold a portion of the employee’s pay and to pay it directly to the IRS. Employers must follow the instructions
of the IRS. If not, employers can face serious consequences. If a taxpayer is self-employed, the IRS can send an IRS wage levy to the taxpayer’s accounts receivable. This commonly referred to as a “payer” levy. Those businesses and customers are now required to send the funds due to the taxpayer directly to the IRS. IRS “wage levies” have a devastating impact on a taxpayer’s financial situation. Although the IRS leaves a small amount for the taxpayer after a levy is implemented, that amount is often insufficient to meet the clients minimal expenses needed to survive. Many taxpayers struggle tremendously due to IRS wage levies. An IRS wage levy will remain in place until the tax liability is paid in full or until it is resolved another way, such as an Installment Agreement, an Offer in Compromise or being placed in Currently Not Collectible status. An experienced tax professional has several methods at his disposal to assist with removing a levy. The smartest action a taxpayer can take is to address his IRS problem prior to a levy being implemented.  Don't just set the letter from the IRS aside...Like a toothache, it won't just go away if ignored.

Rhonda L. Russell, Principal / Russell Financial & Business Services / NIPR National License # 8728891
Bidwell & Russell Tax Defense, Ltd / Tax Attorney & IRS Audit Representatives
Tax and Estate Planning / Tax Debt Solutions