IRS Levies-Garnishments, Bank accounts, Seizure of assets

(Business, personal, pension plans and others).

Written By: Martha De la chaussee

Tax Resolution Expert

A garnishment is a court order directing that money or property of a tax debtor (usually wages paid by an employer) be seized to satisfy a debt owed by a debtor to a plaintiff creditor.

However, the Internal Revenue Service in some cases does not require a court order to levy or seize assets of a tax debtors. The levies are civil administrative procedures and orders that do not require court approval.

Under Internal Revenue Code section 6331, the Internal Revenue Service can "levy upon all property and rights to property" of a taxpayer who owes Federal taxes. The IRS can levy upon assets that are in the possession of the taxpayer and assets in the possession of a third party. Including property placed out of the reach of the government by transfer to third parties (Nominee, transferee, alter-ego).

Court orders are required for seizure of assets located in private areas such as business areas not accessible by the public, personal residences, access to opening a safe deposit box, cash register ( if taxpayer does not open voluntarily), locked luggage inside a seized vehicle, seizure of property located in private yards, enclosed buildings such as garages, and more.

Seizure of assets can take place in public areas with no court order. Such as vehicles on public streets or drive-ways with no fences, business assets located in general public or customer areas not behind counters or doorways only accessible by employees or other permitted person(s).

Bank levies, levies to pension plans, IRA accounts, seizure of trade-marks, licensing agreements, bonds, stocks, art collections, collectibles, jewelry, liquor, guns, etc.

Other types of items that can be seized with no court order or writ of entry include but are not limited to: race horses, animals that have high value such as dogs, cats, birds that get royalties for movies, advertisements or win tournaments that increase their value to the extent that the government would want to take on the responsibility of caring for the animal while it is sold to apply proceeds to tax debt.

Movie and TV personalities have had their royalties, pensions, and earnings from their contracts levied for repayment of their debts. You most likely have seen articles or news features on some high-profile individuals in the movie or TV industry who have or had tax troubles.

Individuals who run businesses under Corporations, Limited Liability companies, Limited Liability partnerships and others have the belief that they are immune to personal liability of their entities tax audit results and debts.

Well, unfortunately for many officers, directors, members, partners of these entities they find themselves having to account for their personal finances including equity in assets and future income earning potential to resolve their entities tax debts. This is a fact more so with Excise taxes and payroll tax debts of entities. Read Internal Revenue Code 6672.

How can a person resolve garnishments and levies? It depends on the type of levy, who is assigned the case (automated collection system vs field collection officer), amount of tax debt, type of tax debt and more.

Will filing a bankruptcy release a garnishment or levy? Maybe. There are rules and guidelines for releasing a levy when a bankruptcy has been filed prior to levy or after issuance of a levy.

Other potential levy and garnishment resolution options include:

Appealing the levy, request an installment agreement in lieu of the levy, submit an offer in compromise, request hardship of your case, pay the amount in full, if the collection statute is ending soon maybe leave the levy in place until the statute expires, get a partial release of the levy to an amount affordable taking into account current financial situation by submitting the appropriate financial statement and documentation, request a release of levy if the tax was due to an audit and you can provide evidence that you are filing an audit reconsideration or adjustment, offer in compromise doubt as to liability, collateral agreement and others.

There are too many factors that come into play to be able to discuss and provide information on the consequences of filing a bankruptcy due to a tax levy and many tax levy options. Contact a tax attorney, CPA or Enrolled Agent to get the best resolution of your levy situation.

Go to www.advocatetaxgroup.com for free resources and information.

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