Have you, your bank or financial institution received an IRS Tax Levy (Form 668-A)? If so, you are probably wondering what this means and what you can do about it. Let’s talk about what an IRS Tax Levy is, why it was sent to you and how you can take care of it.
WHAT IS A TAX LEVY?
A federal tax levy is, in its most basic terms, a seizure of your assets to satisfy a tax debt. The IRS aggressively contacts the source (typically either your bank or
employer) and notifies them that it will be seizing some of your money or property.
The IRS typically issues one of two notices, Form 668-A or 668-W (see IRS Wage Garnishment for help with 668-W).
A tax levy is typically issued to bank accounts and is a one-time levy. This means that the money in your account is “frozen” on the day that the bank or financial institution receives the levy. The money is set aside by the bank for a period of 21 days in order for you to make arrangements for its release for payment of the tax due.
Aside from the “frozen” funds, the account is usually open to be used by you during the 21 days, although this tends to vary depending on your specific financial institution’s policies. Subsequent deposits will not be taken or held unless a new levy is issued.
WHY DID THIS HAPPEN TO YOU?
If you owe back taxes you might be issued an IRS tax levy. This happens as a result of an unpaid tax.
You’re not alone. Thousands of Americans face this issue every year. It’s important that you understand that while this is a serious situation, it can be resolved.
WHAT CAN YOU DO?
There are many options for negotiating adjustments, releases and formalized resolutions to deal with tax levies once they have been issued.
A levy release is best accomplished by detailing a hardship that the levy has caused for you. You should be prepared to prove the details and extent of the hardship with full disclosure of your financial condition and supporting documentation.
If an IRS levy hasn’t been sent to your bank or financial institution, but you think one could be, you need to get ahead and do everything you can to stop the tax levy. It’s much easier to resolve a tax debt situation before a levy happens.
If you want to learn more about how to release a tax levy, download our free guide, which details the methods you can follow to release a levy and the steps you need to follow in order to get the ball moving.
Most importantly, you should be properly informed about the situation that you’re dealing with. 20/20 Tax Resolution can help you have a better understanding.
Let 20/20 be a resource for dealing with your tax problem, and remember, you can contact a tax resolution specialist at any step along the way.