How to Remove a Bank Levy or Wage Levy
IRS Levied My AccountAs Los Angeles tax and bankruptcy attorneys we know the IRS and other taxing agencies including FTB, EDD and CDTFA use tax levies as one of its many tools to collect on taxes which are owed by the taxpayer. It is one of the most powerful tools that the IRS or any tax agency has to collect on its taxes. Unlike other creditors, IRS, FTB, EDD and CDTFA are given the ultimate power to seize any assets that you may have to satisfy taxes which are owed to them without getting a court order. IRS, FTB, EDD, CDTFA are authorized to use vast array of data bases to find out where a taxpayer lives, works, banks, holds investment accounts.
IRS data bases will allow them to have information on your ownership in land, cars, boats, interest in businesses and any other assets which can be sold or liquidated to satisfy taxes which may be owed.
Taxpayers are usually given a short notice by the IRS, FTB, EDD or CDTFA that their properties will be seized by the government and are told to make appropriate arrangements to prevent such seizure.
A bank levy and a wage levy are two most common tax agency legal actions that the Internal Revenue Service (IRS), Franchise Tax Board (FTB) Employment Development Department (EDD) or California Department of Tax and Fee Administration (CDTFA) may take to collect unpaid taxes.
A bank levy is a legal action under the tax code in which the IRS, EDD, FTB or CDTFA seizes funds from a taxpayer's bank account to pay off their tax debt arising from income tax, payroll tax or sales tax obligations. The IRS can issue a bank levy to any financial institution in any state or foreign country where the taxpayer has an account after certain notice requirements, including retirement, checking, savings, and investment accounts. The bank must turn over the funds usually within 10- 20 days to the IRS, FTB or CDTFA, and the taxpayer will typically have a limited time to challenge the levy or make arrangements to pay off their tax debt.
A wage levy is a legal action under the tax code in which the CDTFA, FTB, EDD or IRS garnishes a taxpayer's wages to pay off their tax debt arising from income tax, payroll tax or sales tax obligation. The IRS, FTB, EDD or CDTFA can issue a wage levy to the taxpayer's employer at any time after certain notice requirements, who must then withhold taxpayer's wages and send it to the IRS, FTB, EDD or CDTFA. The amount of the wage levy withheld will depend on the taxing agency that is trying to collect the tax debt as well as taxpayer's income and the amount of their tax debt to IRS, FTB, EDD or CDTFA.
Both a bank levy and a wage levy can have significant financial consequences for a taxpayer, and it is important for taxpayers to take steps to resolve their tax debts in a timely manner to avoid these actions. If you are facing a bank levy or wage levy by the IRS, FTB, EDD or CDTFA, it is advisable to seek the assistance of a tax lawyer who can help you understand your rights and options and advise you on the best course of action to take.
To obtain a release from an IRS, FTB, EDD or CDTFA tax levy, you will need to take steps to resolve the underlying tax debt that is the basis for the levy. Here are some common options that may help a taxpayer avoid either a bank levy or wage levy:
It's important to note that getting a release from an IRS, FTB, EDD or CDTFA levy can be a complex process. If not properly addressed, tax levies can have a devastating effect on most taxpayers. You may lose your wages, holdings in your bank or investment accounts. Your retirement savings may be liquidated and your cars and non-cash assets may be seized and sold at an auction. It is advised that you contact a lawyer immediately if you are threatened with a levy. Otherwise, your finances may suffer irreversible damage.