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Types of Levies

Sep 19, 2019

First of all – What are levies? In plain language, levies are actions that the IRS is empowered to use in taking your stuff when you owe them unpaid taxes. Broadly speaking, when you are dealing with these collection actions you need to know that there are generally two types of levies:

  1. Continuous
  2. Regular

A continuous levy is used on a determinable right to receive a series of payments. This would apply to actions by the IRS to take portions of your wages, social security and commissions. This type of levy will stay in place until the IRS releases the levy, the taxpayer pays the debt, the taxpayer enters into an alternative payment plan or the statute of limitation for collections (normally ten years) expires.

On the other hand, a regular levy only applies to the value of an asset at the time the levy is received. This applies to bank accounts, receivables and brokerage accounts. For example: A taxpayer owes the IRS $50,000, and the IRS sends a levy notice to the taxpayer’s bank on Monday. If the taxpayer’s account has $10,000 in it on Monday, when the levy notice is received, that is all the IRS will get, even if on Tuesday $1,000,000 is deposited. In order for the IRS to collect the additional $40,000 needed to pay off the taxpayer’s balance owed, the IRS would have had to issue a second levy notice. But as with the initial levy notice, that levy could only be used to seize the balance in the bank account at the time the levy was received by the bank.

If you are interested in learning more about IRS liens and levies, consider signing up for our September 26 webinar. 

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Daniel Gibson

Daniel Gibson provides accounting, tax planning and consulting services to real estate and services industries and is a member of the AICPA and New Jersey Society of Certified Public Accountants.

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