Federal Tax Levy Collection Actions in Detail (Part IV)

More examples of property the IRS can seize (“levy”)

· Your federal payments. As an alternative to the levy procedure used for other payments such as dividends and promissory notes, certain federal payments may be systemically seized through the Federal Payment Levy Program in order to pay your tax debt. Under this program, the IRS can generally seize up to 15% of your federal payments (up to 100% of payments due to a vendor for property, goods or services sold or leased to the federal government). They will serve the levy once, not each time you are paid. The levy continues until your debt is fully paid, other arrangements are made, the collection period ends, or the IRS releases the levy. The federal payments that can be seized in this program include, but aren’t limited to, federal retirement annuity income from the Office of Personnel Management, Social Security benefits under Title II of the Social Security Act (OASDI), and federal contractor/vendor payments.

· Your house, car, or other property. If the IRS seizes your house or other property, they will sell your interest in the property and apply the proceeds (after the costs of the sale) to your tax debt. Prior to selling your property, they will calculate a minimum bid price. They will also provide you with a copy of the calculation and give you an opportunity to challenge the fair market value determination. The IRS will then provide you with the notice of sale and announce the pending sale to the public, usually through local newspapers or flyers posted in public places. After giving public notice, they will generally wait 10 days before selling your property. Money from the sale pays for the cost of seizing and selling the property and, finally, your tax debt. If there’s money left over from the sale after paying off your tax debt, they will tell you how to get a refund.

Next week: Property that can’t be seized (“levied”)

(IRS Publication 594 and IRS.gov) (TTT 04/14/2020)