A tax levy is an attempt by the Collection Division of the Internal Revenue Service to collect money from a taxpayer. A tax levy is, in fact, an order by the Internal Revenue Service to a third party, such as a bank, to withhold funds belonging to a taxpayer. The third party is then required to turn over the funds collected to the Internal Revenue Service. The purpose of a tax levy is to collect money from a taxpayer after attempting to collect the money by other means.

When would a tax levy arises?

A tax levy arises when the taxpayer has ignored the notices and letters from the Collection Division of the Internal Revenue Service, and made no attempts to pay-off tax obligations over a period of several months.

What is the effect of a tax levy?

It prevents a taxpayer from receiving any funds owed to the taxpayer by financial institutions, and even by the taxpayer's customers.

Can I get rid of a tax levy if I file a bankruptcy?

Yes. During the bankruptcy proceeding and for a certain period immediately after discharge of a taxpayer's debts, there may be no levies enforced by the Internal Revenue Service.

Can I get a tax levy released?

Yes. A tax levy can be released by contacting the tax collecting agency, and by making alternative payment arrangements to pay-off the tax obligation.

What is the difference between a tax levy and a tax lien?

A tax levy is an order by the Internal Revenue Service to withhold money payable to you, whereas a tax lien is a notice informing the public that the tax collecting agency has superior rights to your property.

Would a 'Homestead' filing on my home protect me against a tax levy?

No. A tax levy has no effect on your "Homestead." While a creditor cannot attach equity in your home that is subject to a "Homestead," tax levies are addressed against third parties who owe money to you.

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