Tax Debt Solutions Blog

Tax Relief: Automated Levy & Manual Levy - What’s the Difference?

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Automated Tax Levy (15%)

The IRS may take an automatic 15% from social security benefits every month.  If the IRS can correspond the government’s Financial Management Service with its delinquent taxes records to show the right to social security it can go ahead.  Once an association is proven the tax payer is provided with an IRS notice of the beginning of a 15% levy on social security.  A notice of confirmation is supplied by the Financial Management Service when the levy comes into practice.

The most commonly used of IRS collection utensils is the automated social security tax levy.  The IRS gets an outcome that is simple, proven and immediate.  For the tax payer it is responsible for the greatest adversity.  Automated levies on social security benefits resulted in 1.74 million payments to the IRS in 2007.  It was anticipated 86 % of the levies came from circumstances where social security was the main or sole income for the tax payer.

Manual Tax Levy (100%)

The IRS can take more than 15% of the social security to a tax payer.  A manual tax levy can keep on taking all social security benefits according to the Internal Revenue Code section 6331 (a).  The code allows levy on salary, wages and other income plus social security.  The automatic levy of 15 % is an extra to the manual levy.

It is when there is no cooperation from a tax payer that a manual tax levy is chosen.  This levy must be allocated to an IRS Revenue Officer.  The automatic levy is a procedure that eliminates the use of paperwork.

Exemptions on a Manual Tax Levy

Tax Relief: Hiding from Uncle Sam is Not a Solution

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Having some knowledge of tax problems will help you to see them early on.  It is advisable for an individual or a business to sort out tax problems as early as possible because you can’t hide from the Internal Revenue Service.

Some of the more usual tax problems are:

941/940 tax – Payroll

A number of problems can come from the payroll system at your place of work.  However, the Uncle Sam still holds you responsible for any outstanding taxes no matter what caused the problem.  According to the IRS it is your responsibility to ensure your taxes are filed correctly.

Tax liens IRS

Tax lien proves the taxpayer has unfiled IRS back taxes.  It is a problem that could implicate personal property such as real estate.  If this occurs you are not allowed to transfer ownership or sell the property until back taxes are paid for.  When your taxes are paid in full the lien will be eliminated.  With a property lien you will struggle to get a loan to pay your taxes.

IRS Levy

The IRS has the power to instruct your bank to withdraw money from your check and savings accounts in order to pay for back taxes.  This is called a bank levy. The IRS also has the power to instruct your employer to hold back money from your salary.  This is called wage garnishment.  These steps are taken by the IRS to force you into paying taxes owed.  The IRS gets their money but often the taxpayer can’t pay other essential bills.

Tax Relief: The IRS Can Seize Your Property

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When your property is confiscated to fulfill a tax debt you owe, the action is called a levy.  The seizure of property for that reason is a lawful action.  A levy of this nature is not a lien.  A claim for the purpose of providing security for a tax debt is a lien.  It is a levy that is responsible for taking the property to pay the tax debt.  Uncle Sam has the power to take your property and sell any kind of personal or real property you own or have a stake in, if you refrain from settling tax debt or contacting the IRS to make other arrangements to pay.  The IRS may:

• Confiscate and sell assets such as your house, car and/or boat
• Levy property held by another person but owned by you e.g. cash loan value of your life insurance, commissions, wages, rental income, retirement accounts, bank accounts, accounts receivable and licenses.      

The IRS can levy if three requirements exist:

• A Notice and Demand for Payment is sent and your tax is evaluated
• You did not pay tax or declined to pay tax
• You were sent a Final Notice of Intent to Levy and Notice of Your Right to a Hearing also called a Levy Notice.  This must take place thirty days prior to the levy.  You may also be handed the notice personally, notice may be left at your place of business or home, or it may be sent registered or certified to your latest known address.  A replacement receipt is necessary.

An IRS official may assess your situation or a Collection Due Process hearing in conjunction with the Office of Appeals at your request.  A Collection Due Process hearing is filed with the IRS that is given on your notification.  The following may be conversed:

• You paid up prior to the sending of the levy notice
• The IRS reviewed the tax and sent the levy of notice during bankruptcy
• The IRS erred in the procedure of their assessment
• The Statute of Limitations terminated prior to the sending of the levy notice
• No chance for you to argue the evaluated liability
• You want to talk about collection choices or
• You want to present a spousal defense       

At the end of a hearing the Office of Appeals delivers a resolution.

5 Ways to Get a Tax Levy Release

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If you are unfortunate enough to get a tax levy, this means the IRS has given you chances but you didn't cooperate with them, or maybe just threw that mail away.  Either way, you will need to work fast to make sure you don't end up with collections coming after your assets.  Here is a small list of 5 ways to get a tax levy release.

1. Pay what you owe.  This is the fastest and easiest way to resolve the situation before any of your assets get seized.  This could cost a lot of money but it may be easier to pay small interest for a bank or other loan so you can handle this right away.

1. Ask the IRS to let you set up a payment agreement.  This is much like the installment agreement the IRS allows but the payments you make will be smaller.  This is a great option to get a tax levy release while still taking care of your debt with the IRS.  Make sure you keep to the payment schedule and don't miss any payments at all.

1. Prove that your assets don't have equity.  If you are already facing hard times and your car is a piece of junk, let the IRS know this.  They won't seize your vehicles if they are old, need severe repairs, or don't run. They don't know the car you bought 2 years ago was destroyed by vandals but a picture will help you get that message across clearly and immediately.

1. Appeal.  Yes, you can appeal the IRS levy right away then you may not have to worry about a tax levy release at all.  Sometimes collectors won't use ethical practices when dealing with you. If you suspect they weren't honest with you, that's definitely grounds for appeal.

1. File Bankruptcy.  This should be a last resort option but this can be a tax levy release by order of the courts.  This isn't a step that should be rushed so make sure you consult your accountant or a tax professional.