Tax Levies and Garnishments

Is it a levy? Or is it a garnishment?

For tax purposes, a levy is taking funds out of your bank account or selling off an asset to satisfy a tax debt. It can also be a taking of payments from another, contractor, credit card processor, or accounts receivable. A garnishment is issued against your wages at work and the IRS or state takes a portion of the funds you earn.


Tax Levies

Tax levies can come at unexpected times. The IRS or state can send a tax levy to your bank account and seize whatever funds you have left in your bank account. These levies can be issued to bank accounts of both individuals and businesses. When the IRS issues a bank levy, the funds are held for 21 days until they are sent to the IRS. That’s the time window in which the levy can be released. Bank levies are much harder to have released than wage garnishments.

IRS Bank Levies

In order to release a bank levy, one must prove financial hardship in order to get it released. Also, if you can show that the funds belonged to someone else that would be reason for release.

Levies on Accounts Receivable

For levies on accounts receivable or credit card processing, a resolution needs to be reached with the IRS. Sometimes these levies can also be released faster by proving that they need to be released to continue operating the business.

Property Seizure

The IRS can seize your property such as real estate, vehicles, or other physical property. It should be noted that it is very rare that the IRS will take your personal residence or vehicles.

Tax Garnishments

Tax garnishments can take nearly all of what you earn. With the IRS tax garnishments can be lifted by reaching a resolution on the back due tax debts with them. Garnishments from the IRS can almost always be lifted. Garnishments from the states sometimes cannot be. California and Colorado are two states that often will not release a garnishment once it has been issued. However, even if it cannot be released often it can be lowered substantially.

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