If you have received a lien or levy notice, you are in the right place to ease the stress that such a notice can bring.
You need help with a levy notice if you received a document that says, “FINAL NOTICE OF INTENT TO LEVY AND NOTICE OF YOUR RIGHT TO A HEARING.” For help with lien notices, go to the Lien Notices section below.
Your “Final Notice of Intent to Levy” document is informing you that the IRS will begin grabbing your “stuff,” primarily bank accounts, savings accounts, and wages, in a few weeks. You really need to IMMEDIATELY seek professional assistance, because you forfeit important legal rights if you wait too long to respond.
Find the date in the upper right hand corner of your letter. You have 30 days from this date, not from the date you received the letter, within which to file a request for a Collection Due Process (CDP) Hearing with the IRS. If you file your CDP Hearing request within the 30 days, you preserve your right to go all the way to Tax Court if needed. During this 30 day period, you can also try to work something out with the IRS, such as an installment payment plan.
Below are some questions you might have:
Q: What is a levy?
A: A levy is a legal seizure of your property to satisfy a tax debt. It is different from a lien, which is a claim used as security for the tax debt.
If you do not pay your taxes (or make arrangements to settle your debt), the IRS can:
- Seize and sell property that you hold (such as your car, boat, or house), or
- Seize property that is yours but is held by someone else (such as your wages, retirement accounts, dividends, bank accounts, rental income, accounts receivables, the cash value of your life insurance, or commissions).
Q: When will the IRS do a levy?
A: The IRS usually does a levy only when the following three conditions have occurred:
- It has assessed the tax and sent you a Notice and Demand for Payment,
- You neglected or refused to pay the tax, and
- It sent you a “Final Notice of Intent to Levy and Notice of Your Right to A Hearing” at least 30 days before the levy. The IRS usually sends this notice to your last known address by certified mail, return receipt requested. However, it may give this notice to you in person, or leave it at your home or usual place of business.
Q: Can the IRS levy my Social Security payment?
A: The following is a list of federal payments you may receive that the IRS can levy under the Federal Payment Levy Program in order to pay your tax debt:
- Federal retirement annuity income from the Office of Personnel Management,
- Social Security benefits under Title II of the Social Security Act (OASDI)
- Federal contractor/vendor payments, or
- Federal employee salary and travel payments.
Q: Is there some property that cannot be levied?
A: By law, some property cannot be levied or seized. The IRS may not levy your property unless it has determined that it expects there to be net proceeds to apply to the liability. In addition, it may not levy your property on the day you attend a collection interview in response to a summons.
Other items the IRS may not levy include:
- School books and certain clothing;
- Fuel, provisions, furniture, and personal effects for a household totaling $9,200;*
- Books and tools you use in your trade, business, or profession, totaling $4,600;*
- Unemployment benefits;
- Undelivered mail;
- Certain annuity and pension benefits;
- Certain service-connected disability payments;
- Workers compensation;
- Salary, wages, or income included in a judgment for court-ordered child support payments;
- Certain public assistance payments; or
- A minimum weekly exemption for wages, salary, and other income.
* These amounts are indexed annually for inflation. (calendar year 2017)
For more information, give us a call at (703) 436-1176 or order one of our FREE consumer guides!
If you received a lien notice, was it from the IRS or was it from the Virginia Department of Taxation?
A lien notice from the IRS will have a heading or bold wording stating “Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320” or something very similar. You probably received this document by certified mail.
If your notice was from the Virginia Department of Taxation, it could be a “Notice of Intent to File Memorandum of Lien.” Or, it could be the more problematic “Notice of Tax Lien and Demand for Payment of State Taxes.”
The IRS uses the term “lien” to signify that it has a legal claim to your property as security for payment of your tax debt. The federal lien arises when the following actions have occurred:
- The IRS assessed the tax liability;
- The IRS sent you Notice and Demand for Payment; and
- You neglected or refused to fully pay the debt within ten days after the IRS notified you about it.
The IRS then may file a “Notice of Federal Tax Lien” (NFTL) in the public records. By filing a NFTL, the IRS puts your other creditors on notice that it has a claim against all of your property. This includes property you acquire after the lien was filed. The lien becomes attached to all of your property (such as your house, your car, your bank account) and to all of your rights to property (such as the accounts receivable of your business).
Once a lien is filed, your credit rating may be harmed. For instance, you could have trouble getting a loan, buying a house or a car, getting a new credit card, or signing a lease.
Along with the NFTL, you should have received some other documents that explain your rights to appeal the filing of the notice. Your appeal would focus on whether or not the IRS followed all the correct procedural steps before it filed the NFTL.
You should promptly consult a competent professional for guidance on what actions, if any, you should take. Do NOT ignore the Notice of Federal Tax Lien, because the IRS could eventually take actions that are even more severe.
The Virginia Department of Taxation uses the term “Memorandum of Lien”(a hyperlink to a pdf sample document) to inform you that it has filed a document in the local land records showing that you owe taxes to Virginia.
If you have received such a notice, you should get professional help immediately. Do NOT ignore the Virginia Memorandum of Lien because the next actions the taxing authority can take could be even more disastrous.
If you received from the Virginia Department of Taxation a “Notice of Tax Lien and Demand for Payment of State Taxes,” then so did whichever institution holds your money, such as your bank or credit union. The institution that received the demand is identified on the face of the notice, as is the amount due. This bank or financial institution must “freeze” your account so it can send the available funds to the State. You are likely to incur overdraft fees for all of the payment items that are outstanding at the time.
For more information, call us at (703) 436-1176 to schedule a consultation or order one of our FREE consumer guides!