Tax Levy Limits
Taxpayers who do not pay their taxes or make arrangements to pay the tax risk enforcement action by the Internal Revenue Service (IRS) up to, and including, a federal tax levy. There are very few limits to this last resort of the IRS.
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Purpose
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A levy is the legal seizure of your assets to settle an outstanding tax debt. In most cases the IRS (or state department of revenue) will sell your assets to cover the back taxes. A levy can be issued on your home, bank account, Social Security payments, as well as any other real or intellectual property (such as copyrights).
Requirements
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State levies operate under the laws of the state in which the levy is issued. With federal levies, the IRS must provide the taxpayer with notice of the impending levy within 30 days of it going into effect.
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Protest
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If a taxpayer wishes to stop the levy, he must request a hearing using IRS Form 12153. At the hearing the taxpayer will be provided the opportunity to challenge the validity or amount of the levy.
Exemptions
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Property exempt from levies includes school books, fuel, provisions and furniture not to exceed $6,250, unemployment benefits, tools of the taxpayer's trade, workman's compensation, certain annuities and pensions, judgments for support of minor children, a minimum exemption for wage and salary, state public assistance and certain disability payments.
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References
- Photo Credit tax forms image by Chad McDermott from Fotolia.com
