Once an individual thinks of IRS collections, she or he thinks about 2 popular methods. An IRS levy and an IRS tax lien. Many believe these to be one and the similar, unfortunately, they are very different.



An IRS levy is a seizure of private assets to pay a tax liability, but a tax lien protects and secures the IRS interest in your asset and any rights to asset. It does not truly seize the asset. It frequently goes into effect when you purchase asset. At the time of sale, the IRS has rights to the proceeds of the sale. An IRS levy basically seizes individual property.



Before the IRS can gather, usually 3 conditions must be met:



1. The IRS tested the tax and gives a Notice and Demand for Payment.



2. The individual ignored or declined to pay the tax.



3. The IRS gives a Final Notice of Intent to Levy and Notice of Your Right Hearing at least 30 days before the levy. The IRS can leave it at a home, place of business or send it to the last known address that the IRS has on file.



There are 4 typical types of levy sources for the IRS:



1. Bank Account: A bank levy is when the IRS usually takes funds promptly from a bank account. The tax payer will normally not know it until it has already took place. The bank will be requested to maintain the funds up to the amount owed on the day the levy came. The bank is asked to send the funds to the IRS if the levy is not released within 21 days.



2. Wage Levy: This levy is sent to the employer and demands that the employer keep a certain part of the pay check. The IRS can levy up to 85% of a pay check. The IRS is able to also levy Social Security Payment



3. Third Party Accounts: This would consist of retirement accounts, stock accounts, 1099 sources simply any source of salary or assets with a few exemptions.



4. Property: This is the least common form of levy, because of the fact that it is often hard for the IRS to do. This would consist of vehicles, property, boats or basically any other sort of property.



There is also a difference between a continuous levy and a onetime levy. A continuous levy would consist of salary, social security and other types of earnings. A onetime levy would include a bank levy and a 1099 income. The IRS only has rights to the amount in the account or due the separate contractor the day the IRS levy was given. This does not end the IRS from levying again.



An IRS levy will keep on until the tax debt is paid out, the statues of limitations expires, or other arrangements are made, which could include an Installment Agreement, having the account put in Section 53 or a hardship, or having an Offer in Compromise taken.



It is essential to hire a tax professional with practical knowledge in working with the collection department of the IRS. This will make certain that the tax laws are worked to the tax payer's advantage. An skilled tax specialist will also know the way how to fix tax liabilities and the fastest way to end irs levy action according to the tax payer's specific circumstances.