HR Glossary for HR Professionals
Glossary of the most common HR terms and acronyms to assist professionals navigating the ever-growing and ever-changing world of HR terminology.
What is a Tax Levy?
A tax levy is a collection process used by the IRS where a taxpayer’s assets are legally seized to satisfy a tax liability.
What Actions Will the IRS Take Before Issuing a Tax Levy?
In most instances, the IRS will only issue a tax levy after the following three steps have already been taken:
- The IRS assessed the tax and issued a bill for payment in the form of a Notice and Demand for Payment
- The individual in question did not pay the tax
- The IRS sent a levy notice—known as an Intent to Levy and Notice of Your Right to A Hearing—at least 30 days prior to the levy
When Does the IRS Issue a Tax Levy?
The IRS typically issues a tax levy if an individual does not pay their taxes and the IRS determines that the next appropriate action is to issue the levy.
How Do You Avoid a Tax Levy?
According to the IRS, there are a few different ways to avoid a tax levy:
- Filing your return and paying your taxes on time
- Request an extension on your tax return if you cannot file or pay on time
- Work with the IRS to pay off the debt if you can’t immediately settle the amount; the IRS also lists the various ways in which taxpayers can pay their taxes
How Do You Get a Tax Levy Released?
To have a tax levy released, an individual must immediately request a release from the IRS. There is also a comprehensive appeals process that an individual can undertake with the IRS, including if the levy “can cause immediate economic hardship.”
According to the IRS, the agency must release a tax levy under the following conditions:
- The person paid the amount they owed
- The period for collection ended before the levy was issued
- Releasing the levy will help the individual pay their taxes
- The individual enters into an Installment Agreement and the terms of the agreement stipulate that the levy will not continue
- The levy creates an economic hardship (the levy prevents you from meeting basic, reasonable living expenses)
- The value of the property is more than the amount owed and releasing the levy will not hinder the IRS’s ability to collect the amount owed
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