Types of IRS Levies the IRS Uses to Collect Unpaid Taxes

By: Matt Robinson | Posted: 20th September 2011

Are you aware of the different types of IRS tax levies? A levy is a tool that the IRS uses to collect unpaid taxes. This is not something that you have to worry about unless you owe money and are ignoring notices from the IRS.

It is important to become familiar with each and every type of IRS tax levy. Although you may never run into this situation, this information can be extremely valuable. If nothing else, it will scare you from not paying your taxes on time or working out a payment method with the IRS.

Wage Garnishment

This is the most common form of a tax levy. With this, the IRS makes your employer deduct a particular amount of money from each pay check. This money will go towards your unpaid taxes. Your employer has no choice but to listen to the IRS unless they want to also get into hot water.

Bank Account Levy

The IRS can directly access your bank account, freeze the funds, and take money to satisfy past due tax. They can continue to take money from your account until they have collected enough to cover your entire tax debt.

While this is going on, you have no choice but to sit back and watch. Your bank account will be frozen. In short, you are unable to withdrawal your money before the IRS.

Property Seizure

While this is the least common type of IRS tax levy, it does happen from time to time. In most cases, it is a last resort. With property seizure, the IRS can take personal assets including cars, boat, and home. Again, the value of your assets will go towards paying your tax debt.

Social Security Garnishment or Levy

Again, this is one of the least common types of tax levies. The IRS can garnish up to 15 percent of your Social Security income via the Automated Federal Payment Levy Program (FPLP). If they do not go through the Automated Federal Payment Levy Program (FPLP) they can garnish without limit.

Before the IRS gets started with one of the levies listed above, they will contact you several times. If you receive a notice in the mail, do not take this lightly. Instead, contact the IRS as soon as possible to pay your taxes in full or setup a payment plan. In short, you should do whatever you can to avoid a levy.

These are the types of IRS tax levies that the IRS uses to collect unpaid taxes. If possible, avoid a levy at all costs. If you do run into this situation, hire a professional to show you the way.

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Tags: amount of money, unpaid taxes, several times, social security, personal assets, cars, hot water, last resort, tax debt, wage garnishment