You have a balance on your account and the IRS has issued a levy or has conducted a seizure to satisfy your tax debt. The term “levy” and “seizure” can be used interchangeably; however, the term “levy” is typically used when the IRS attaches to funds, while the term “seizure” is typically used when the IRS attaches to physical property.
Some levies have a “one-time” effect, where the IRS takes an asset all at once.
A levy on your bank account takes only what is in the account at the time your bank receives the levy. The IRS must issue another levy to capture additional funds at a later date.
Other levies have a “continuous” effect. They remain in place until the IRS releases the levy or your debt is paid in full. Federal law allows the IRS to issue a continuous levy on salary and wages and certain federal payments. Levies against your wages or social security income are generally continuous.
When a levy attaches to your salary, generally the levy only attaches to a portion of your paycheck, until the levy is released, or your balance is full paid. By law, a portion of your wages is exempt from levy based on your filing status, additional standard deduction, and dependents. There are some exceptions to this exemption, including when other income provides enough funds to meet the exempt levy amount. To ensure the correct exemption amount is excluded from levy, your employer will ask you to complete a Statement of Exemptions and Filing status, Form 668-W, Part 3, to complete and return within three days. If you do not return the statement in three days, your exempt amount is figured as if you are married filing separately with no dependents. Your employer will use the information provided on the Form 668-W, as well as Publication 1494 to determine the amount that is exempt. The exempt amount will be paid to you by your employer and the remaining amount will be sent to the IRS and applied to your tax balance.
The IRS can levy continuously on certain federal payments you receive, such as Social Security benefits. Under this program, the IRS can generally take up to 15 percent of your federal payments, or up to 100 percent of payments due to a vendor for goods or services sold or leased to the federal government. See What You Need to Know: The Federal Payment Levy Program for more information.
IRS may levy your state tax refunds, as well as payments owed by clients for services you or your business have provided or will provide.
The IRS may seize your real or personal property. The IRS will determine the minimum amount it will accept for the sale, also known as the “minimum bid”. You will be provided with a copy of the minimum bid and fair market value amounts, as well as a notice of sale. IRS will advertise the sale to the public through various means, such as newspaper, flyer, or internet. After giving public notice, the IRS will generally wait at least 10 days before selling your property. If there are funds left over from the sale after paying the costs associated with the seizure (including any liens or judgments that have a senior position to the IRS) and your tax debt, the IRS will tell you how to get a refund of the remaining funds.
