Tax Lien, Levy & Garnishment Appeals and Removal

What is a Lien?

A federal tax lien is a claim by the IRS that is registered against a taxpayer’s real or personal property for non-payment of assessed taxes.

If the IRS has properly filed a federal tax lien, the Internal Revenue Service can seize and sell your real estate or personal property.  Likewise, the IRS can seek to levy property that is yours as well.  The IRS may seek to garnish your wages, or levy against your retirement accounts, dividends, bank accounts, licenses, rental income, and accounts receivables

The Notice of Federal Tax Lien is a document filed by the IRS to protect the federal government’s interest against other potential creditors such as bona fide purchasers and judgment creditors.

Stopping or Releasing an IRS Tax Levy

Tax Levies occur in one of two ways: Bank levies and Wage Garnishments

What is a tax levy?
A tax levy is a seizure of property to satisfy a tax debt.  Whereas a tax lien is a claim that the Internal Revenue Service utilizes as security for payment of a tax debt, a tax levy actually takes property or wages to satisfy the debt.

The IRS will levy once three conditions have been satisfied.  First, the tax liability must have been assessed and the taxpayer must have been notified of a Demand for Payment.  Second, the taxpayer must have refused or neglected to pay the tax liability.  Finally, a Final Notice of Intent to Levy as well as a Notice of Your Right to a Hearing must have been sent by the IRS to the taxpayer at least 30 days before the tax levy was issued.

If you have been assessed by the IRS you will either be given notice in person or the IRS may leave the notice at your home or place of business.  The IRS may also send the notice to your last known address by certified or registered mail along with a return receipt requested.

Bank Levies
A bank must wait 21 calendar days after a levy is served before sending payment to the Internal Revenue Service.  Then, on the next business day, the bank must turn over the taxpayer’s money.  The bank will not send money that is subject to attachment or execution under judicial process. “Bank” includes credit unions, savings and loan associations, trust companies, and others described in IRC 408(n) and Treas. Reg. §301.6332–3(b).

During the 21 day holding period, a bank levy may be released, or the amount owed may decrease.  If the bank receives no release, it must send the payment after the holding period.  No additional notice is required.

The bank must send the amount in the taxpayer’s account.  However, the bank cannot send more than the amount shown on the notice of levy.

The notice of levy only reaches the amount on deposit when the levy is received.  Money deposited later is not surrendered, including deposits during the holding period.  Another levy must be served by the IRS to reach this additional deposited money.  Also, the levy only reaches deposits that have cleared and are available for the taxpayer to withdraw.

A taxpayer will be reimbursed for bank charges caused by erroneous levies.
Wage Levy or Wage Garnishment

A wage garnishment requires an employer to withhold part of a taxpayer’s income or wages for the purpose of paying off the taxpayer’s debt.  Unlike a bank levy, the wage garnishment is continuous in nature, meaning the IRS will continue to receive money from your employer until either the tax debt is satisfied, the taxpayer loses or quits his job, or a negotiated agreement is reached between the taxpayer and the IRS.

Contact our national tax law firm today for a free no obligation consultation on releasing your IRS Wage Levy as well as stopping a wage garnishment.

Can a Tax Levy Be Appealed?
Yes, a tax levy can be appealed.  In fact, in many of our cases, we at Sheppard Law Offices have helped our clients appeal a tax levy through requesting a Collection Due Process hearing with the Office of Appeals.

Provided below are some of the grounds in which we can help you appeal a tax levy:

  1. All taxes owed have been paid prior to the IRS sending the notice of levy.
  2. If the IRS has assessed the tax and sent the notice of levy when the taxpayer was in bankruptcy, the tax levy is subject to an automatic stay during bankruptcy proceedings.
  3. A procedural error on the part of the IRS was made during the assessment.
  4. The statute of limitations (i.e. the time for the IRS to collect the tax) expired prior to the IRS sending the notice of levy.
  5. No opportunity was afforded the taxpayer to dispute the assessed liability.
  6. The taxpayer makes a request to discuss collection options.
  7. An innocent spousal relief claim is made by the taxpayer.