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The IRS is involved with many states in a program titled ‘State Income Tax Levy Program' (SITLP). Not all states are involved in this program. The purpose of this program is to allow the IRS to levy your state income tax refund to satisfy any delinquent federal tax bills. The program matches the state income tax refund database with the federal unpaid tax liability (delinquent taxes) database. The state will send you a notice of the levy when all the following happens:
You can have your IRS tax levy removed (released) from your property whenever any of the following situations apply:
You may read about IRS tax liens and IRS tax levies, but not understand what the difference is. Both a tax lien and a tax levy are considered part of the enforced collection process. These methods of collecting your unpaid tax bill are used after you have not voluntarily paid, or agreed to pay, your back taxes.
Tax lien. A tax lien is the first step in the IRS enforced collection process. The purpose of the tax lien is to stake a claim against any of your assets. By filing the Notice of Tax Lien in your county's public records system, anyone interested has notice that the state or federal government has a claim against your assets. The filing gives the taxing authority priority over other creditors, in most cases.
In short, a tax lien is a claim against your property. You need to pay off the tax lien in order to gain control of your assets.
Tax levy. A tax levy, on the other hand, is a continuation of the enforced collection process. When your unpaid tax bill has reached the point of being unsatisfied, the taxing authority will slap a tax levy against your assets. This means they can seize any and all of your assets to pay off your unpaid tax bill. Also, you may not receive an advanced notice.
If you are a wage-earner (are an employee of someone) you may be affected by a wage levy. Another term for wage levy is wage garnishment.
This is the second most popular way for the IRS to levy your assets. They simply target your wages.
If you are self-employed and receive income from l099 various sources, the IRS can also levy notices to those businesses or individuals.
Once you have not voluntarily paid, or agreed upon paying, your back taxes, the IRS starts their enforced collection process. The point where the IRS seizes your assets is known as the IRS tax levy stage. Some of your assets that the IRS may take from you include:
An IRS levy arrives shortly after the Notice of Lien. You may receive a written notice, or not. An IRS levy can happen even though no a tax lien has not been filed.
An IRS levy occurs only when you have not attempted to contact the IRS or repay your unpaid tax bill. They do not happen totally out of the blue.
If you dispute the tax levy, you do have rights during the IRS collection process. You will need to fill out and send the IRS Form 12153, Request for A Collection Due Process Hearing.
Requesting a collection due process hearing must be done within 30 days after receiving notice of a tax levy being served against your property. You will be filing your appeal with the Office of Appeals. Here is a sampling of some of the issues you may discuss at the Collection Due Process Hearing:
The last step in the IRS enforced collection process involves a levy. If you have ignored all attempts by the IRS to either negotiate repayment or paid your unpaid tax bill in full, the IRS will slap you with a Notice of Levy.
This notice allows the IRS to legally take all or any of your personal and real property in order to satisfy your unpaid tax bill. In addition to currently owned property, the levy notice will apply to any future interest you may receive in property.
Any property you have that was previously subjected to a tax lien, will not have a tax levy. (One piece of property cannot have two liens placed on it). This entire process could have been negated if only you would have contacted the IRS willingly.