There are several tax levies and partial levies that IRS can apply. The most well known and biting is the one I often see here at my office: the Wage levy or wage garnishment!
(Others; to be explained later could be a percentage of Social Security, Military pay, Brokerage account or bank and Credit Unions).
Wage levies are often so biting because a married person with one child could lose up to 70% (2/3) of their check each payday (garnished and sent to IRS).
IRS is often looking to get your attention here (not necessarily have you set up a plan) or have you acknowledge these late taxes.
Usually, if you have not answered letters from the IRS and/or not filed or recognized your back taxes, the IRS may have filed for you ASFR returns. In most of these cases one must be tax compliant before we make your levy go away. If you bring your tax liability or IRS Levy to us in time, I can often lift the levy in time by IRS Fax to your payroll department.
Social Security or Military pay is similar to wage levies but are usually limited to 20%. Lifting these wage levies is tougher, because once the IRS agrees to lift them, reporting them from one government agency to another is not automatic.
Brokerage, credit union or bank levies are different because the IRS hits these accounts for a certain amount up to and then gives you time to make arrangements before hitting it again!
Summary of the ASFR or “IRS prepared tax returns:” IRS bases these on Married, filing separately with no dependents or even the standard tax deductions. Should you even have broker transactions (IRS has no way to figure cost-basis) so the IRS thinks they are going after some (“day trader”) for a possible million dollars+ in back taxes.
Tax Liens: Often a tax lien is done after the fact once a person or company signs an installment agreement, is missing in action or whenever the IRS thinks they need to protect their interest in a person or companies’ property. It is often not much you can do about this although you have the right to a hearing. Should you wish to make an IRS settlement, enter into an installment agreement or Offer in Compromise, you will find that you must surely agree to the lien.
IRS Lien Release: The lien is on file in the county where you live and may be released there or local service center when you have satisfied your obligations.
