A levy is a legal action that allows government agencies, such as the IRS, state revenue departments, or financial institutions—to seize a person’s property or assets to settle unpaid tax debts. This enforcement measure can involve garnishing wages, freezing bank accounts, or taking control of physical or financial assets.
Why and How Levies Are Issued
A levy is typically a last-resort action after a taxpayer has failed to respond to prior notices. The IRS, for instance, follows a specific process before moving forward with a levy:
- Tax assessment: The IRS determines the amount owed and sends a formal demand for payment (often referred to as a tax bill).
- Non-payment: The taxpayer either refuses or fails to pay the amount due.
- Final warning: At least 30 days before enforcing a levy, the IRS issues a Final Notice of Intent to Levy, along with details on the taxpayer’s right to a hearing.
- Third-party contact notice: The IRS notifies the taxpayer in advance that they may contact others—such as banks or employers, while trying to collect the debt.
What Can Be Seized Under a Levy?
The scope of a levy is broad and can include a variety of assets such as:
- Real estate (e.g., a home or land)
- Vehicles
- Retirement funds
- Checking and savings accounts
- Income from wages or commissions
In many cases, the seized property is sold, and the proceeds are applied toward the outstanding tax balance.
How Beyond Helps Employers Handle Wage Levies
Wage garnishments due to tax levies can create added complexity for payroll departments. With Beyond, businesses have access to tools that automatically calculate and withhold the appropriate amounts from employee paychecks, ensuring compliance with federal and state requirements. This not only reduces administrative strain but also helps prevent costly legal missteps.