An IRS levy permits the legal seizure of your property to satisfy a tax debt. It can garnish wages, take money in your bank or other financial account, seize and sell your vehicle(s), real estate and other personal property. Use this IRS link for more information.
You cannot deduct tax penalties from your federal taxes. If you owe interest on top of tax debt, that interest is also not deductible. Levies are similar to a penalty.
A tax levy is the next step in the collection process after a tax lien and occurs when the IRS seizes your property to pay taxes owed. The IRS may levy a variety of assets:
- Money in your checking account
- Tax refunds
- Wages from your job
- Cars
- Houses
- Other property
The IRS will then convert these assets into cash and use that money to pay down the debt you owe.
The IRS cannot levy your property in the following situations:
- You have a current or pending installment agreement or offer in compromise
- The IRS determines you’re unable to pay due to economic hardship
Tax Levy and Liens
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