State Tax Levies Against Wages & Property


State taxation authorities can seize and sell your real and personal property to satisfy a state tax debt. Additionally, the state department of taxation can levy against your wages, also known as a wage garnishment. In order to collect back taxes, the state tax authority can levy against other property you may own such as retirement accounts, accounts receivables, rental income, and of course bank accounts.


Tax Lien vs. Tax Levy

Whereas a tax lien is a claim that the state department of taxation or IRS uses to secure payment of a tax debt, a tax levy actually takes property or wages to satisfy that debt to the state taxation authority or the IRS.  A lien essentially lays the groundwork for a levy, which is why a taxation debt attorney will advise you to take immediate action if you receive notice of a lien.


State Tax Collection Levy

A bank levy or any other type of levy by the state tax collectors will occur only after certain events have taken place. After a tax debt has been assessed, the state issues a Notice of Demand and Payment. If you fail to respond to that Notice of Demand and Payment by failing to pay the tax debt or establishing some type of tax settlement or repayment plan, the state tax collectors will send you Notices of Intent to Levy. These are warning letters informing you of the need to take action to get your tax debt problem resolved as the state taxation authority will soon seek to levy your property.  The state will issue Final Notice of Intent to Levy and Notice of Your Right to A Hearing at least 30 days before the levy.


Should the state tax collectors escalate their efforts to collect on your debt, the following are examples of assets that may be seized:


    Real estate

    Retirement Accounts


    Checking and Savings Accounts

    Rental Income


Bank Levies

Once your bank is notified of the levy of your account by the state tax authority, it is required to place all funds on hold for 21 days. Once the 21 day period ends, the bank is then required to turnover the levied funds from that bank account to the state taxation authority. If your tax debt gets to this stage, it is crucial that you take steps to resolve the tax debt with the state within the twenty-one day period. It is also important to have that tax resolution in writing to use as evidence in future dealings with the state tax collectors.


Appealing a Tax Levy

It is possible to successfully appeal to remove a state assessed tax levy under certain circumstances.  At Sheppard Law Offices, we have helped many of our clients appeal tax levies.  Here are some of the grounds upon which we can help you win an appeal of your tax levy:


    The state assessed your tax and sent the notice of levy during your bankruptcy proceedings

    The state made a procedural error during the assessment of your taxes

    The statute of limitations expired prior to the state sending the notice of levy

    You were not afforded an opportunity to dispute your assessed liability

    You have made a request to discuss collection options


A levy ends when either the levy is released by the state taxation authority, the tax debt is paid in its entirety, or when the time period for collection has expired. A state assessed tax levy may also be released if you can prove that an economic hardship would result if the levy would take place. However, this does not mean the state tax debt disappears. Action must take place with the state tax authority to establish a tax settlement or payment plan arrangement.


Contact the Sheppard Law Offices today at 1-877-505-9455 to receive a free consultation regarding your state tax lien, tax levy, or wage garnishment. We are experienced in dealing with the IRS, State, and local taxation authorities.






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