IRS Debt Actions

If you owe money to the IRS or your state tax agency, there are several actions they may take against you to get their money.

Depending on the amount you owe, the length of time of your delinquency and other factors, the government may use any of these tools to force you to pay:

• Lien
• Levy
• Seizure
• Garnishment

Any one of these actions can have a severe impact, both now and on your credit. Talk to a tax attorney to discuss your best options in keeping the IRS at bay and paying back your debt on your terms. Simply fill out our free online evaluation form to find an attorney near you.

A lien is a legal claim to a property as security for payment. A lien is not a transfer of property – if the IRS issues a lien against your home, for example, you may still be able to live in your home. A lien is typically a first step to taking your property, and the IRS hopes the threat will force you into payment.

If you decide to ignore a lien, the IRS may become aggressive, and issue a levy.

While a lien is used as security for payment, a levy will actually take your home, business or property away from you. The IRS will liquidate your assets to satisfy your tax debt.

The IRS is required to notify you of a levy by sending a Final Notice of Intent to Levy and Notice of Your Right to a Hearing at least 30 days before the levy is put in place. The IRS may deliver this notice in person, or leave it at your last known address of residence or work.

However, in the case of a home or car, the IRS must submit to any prior lien holders, such as mortgage companies, and uses the "quick sale" value of 80% to calculate the worth of the asset.

For example, if you have a house that is worth $300,000 but owe $240,000 on your mortgage, the mortgage company has first right to any money made by the sale, leaving the IRS with nothing to claim. The IRS is more likely to go after two sources: your bank accounts and your wages.

A bank levy is a one-time sweep of your bank accounts. The IRS can take up to your full balance to satisfy your debt. However, any deposits you make after the bank levy are off limits to the IRS.

A wage levy, also called garnishment, is a continuous deduction from your paychecks, taken until the full debt is satisfied. The IRS can take up to 85% of your wages for as long as it takes to pay back your debt, or until the statute of limitations expires.

If you own a business and are under investigation, the IRS can issue a levy against your Accounts Receivable. The IRS can take 100% of your business's earnings until the debt is satisfied.

If the IRS is threatening to take away your home or other property, it may be time to talk to a tax attorney. Simply fill out our free online evaluation form to connect with a local tax attorney who can help you deal with your tax debt today.