When Is An IRS Levy Continuous?

The IRS has multiple ways to collect past due taxes.  One of the most effective means for the IRS to collect is via the levying of monies from the taxpayer.  A levy is a taking of property such as a bank levy or wage levy.  When the IRS issues a levy, the levy could be a one-time levy or could be a continuous levy.  This article was prepared by a tax attorney at the McGuire Law Firm in Columbus, OH to provide information as to when a levy is continuous or just a one-time levy. If you are facing an IRS debt-collection action, get in touch to discuss your options. 

Is a Bank Levy Continuous?

Generally, no.  A levy issued to a taxpayer’s bank is generally a one-time levy.  The levy should attach to the funds in the taxpayer’s account as of the time the bank receives and processes the levy.  The bank is instructed to hold the levied funds for 21 days and then release the funds to the IRS.  During this 21 day period, the IRS could release the levy in full or release a portion of the levy.

Is a Wage Levy Continuous?

Generally, yes.  A wage levy, which may also be referred to as a “wage garnishment” is continuous until the tax liabilities covered within the levy are satisfied or the IRS rleases the wage levy.  With each pay period, the taxpayer’s employer s to withhold a certain amount of the taxpayer’s wages and pay the funds to the IRS.  Thus, the wage levy is not simply in place for only 1 or a few pay periods and technically could be in place for years to satisfy the taxpayer’s tax debt.

Is a Levy to Third-Parties Who Owe a Taxpayer Money Continuous?

Generally, yes.  If you are providing services to a third-party as a contractor and are owed money, the IRS can issue a levy to the third-party to pay funds owed to the taxpayer over to the government.  If no money is owed to the taxpayer, there is nothing to pay over to the IRS.  However, if funds are owed to the taxpayer, the third-party needs to continue to pay the funds to the IRS until the levy is released.  

How Do I Get a Levy Released?

If the levy satisfied the tax debt or the taxpayer pays off the tax debt, the levy should be released.  However, the taxpayer may not have the abilty to satisfy the tax debt in full right away.  If the taxpayer establishes a formal payment agreement, the IRS will usually release the levy.  Further, if the taxpayer shows the levy is creating an economic hardship the IRS will usually release the levy or release a portion of the funds being levied.  For example, if the taxpayer’s bank was holding $15,000 from a levy and the taxpayer demonstrated that the failure to release $5,000 of the levied funds would create a hardship because the taxpayer could not necessary bills to live, the IRS may issue a notice to the bank to release $5,000 of the levied funds.  Further, if the IRS had issued a wage levy, the IRS could adjust the percentage or amount of the wages being levied, or release the wage levy in full.

What Do I Do If The IRS Has Issued a Levy?

If you owe taxes to the IRS and the IRS has threatened or actually levied your bank account or wages, you should take action to make sure the matter is being resolved such that you do not have to wonder if or when you will wake up with your bank account cleared out.  You can contact The McGuire Law Firm to speak with a Columbus tax attorney regarding your tax issues.  Contact The McGuire Law Firm for a free consultation with a tax attorney in Columbus, Ohio,