Liens, Levies (garnishments) and Seizures
Liens, levies and seizures are the most commonly used collection tools of a tax agency. Levies and garnishments basically accomplish the same thing: the taking of personal property such as wages, bank accounts, accounts receivables, self employment income, pension and Social Security benefits, etc. The Internal Revenue Service can and does exercise its power to levy against all personal property, whereas California tax agencies generally do not exercise such a wide range of confiscatory powers.
Seizures of property is a technique more often used by the IRS but can be initiated at least in part by state tax agencies. Seizures can be made upon virtually any real and personal property a taxpayer can own. The IRS in particular believes it can “step into the shoes of the taxpayer,” in that any right, title or interest the taxpayer has, the IRS can acquire that right. The seizure process can involve the actual physical confiscation of property, or the exercise of a “paper act” that reduces the title of ownership to the tax agency. The asset is then ultimately sold via a government endorsed sale, with the proceeds credited to the delinquent account of the taxpayer.
The filing of tax liens is a collection tool used by all tax agencies. Taxpayers who have an interest in real property, businesses, or other assets can have their ownership fouled by the filing of a tax lien. If a taxpayer with a filed lien wishes to sell, transfer, finance, etc property, the lien will have a very chilling effect that transaction. Once a tax lien is recorded, it is a public notice that can damage a taxpayers’ credit for years.
These tax collection tools are disruptive and often traumatizing to most taxpayers and should be responded to immediately. We strive to prevent such enforced tax collection actions. When a tax agency does enforce collection, we should be contacted immediately, as we have the expertise to negotiate a release or modification of these collection actions.