Releasing a Federal Tax Levy

By Seth Maynard

Your property may be legally seized, or taken, to pay for a debt. This is what is called a “levy” and the government may apply this to your case should you fail to pay for your tax debts. Property is not simply “claimed” or put stakes upon; it is actually taken from you. The Internal Revenue Service (I.R.S.) may sell or keep what it takes. This includes properties you hold, like your car or house, and properties you own but are held by someone else. The latter includes your bank accounts, salary, and dividends, to name a few.

The levy is performed after three requirements are satisfied. First, tax should have been assessed and you should have been notified regarding your liabilities. Second, you failed to honor your tax debts. Third, you are sent a Final Notice of Intent to Levy at least 30 days before you are relieved of your property.

This all sounds quite final should you be the recipient of a Final Notice. However, did you know that this Notice is yet another example of an unenforceable government claim?

In reality, the Notice of Levy found in Internal Revenue Code (I.R.C.) Section 6331(a) only applies to special situations involving an employee, officer, or elected official of the United States of America. If you happen to be none of these, the code does not apply to you. No procedure currently exists for this. The “special” situations refer to the levy being applied upon the salary and wages of the types of individuals listed above.

Next, legal precedents found that within its context, the special procedure being applied does not constitute a levy but a set-off. A set-off is a transfer of funds within a government agency. A levy, in this case, is a transfer of funds between government agencies. A Notice of Levy is not enough to seize property, a Warrant of Distrait is necessary. This is because the Notice, established to be non-compliant with the lien-seizure-levy process, creates nothing but an offset.

To obtain a release, a Demand for Release of Notice of Levy must be filed. A sample of this and any other letters and requests you may need to release a federal tax levy can be found in Michael Ioane’s “Boston Tea Party,” currently in its third edition. Put together in a binder, the information, forms, and letters are collated and pre-prepared for your convenience.

It is recommended that you meet with the revenue officer to accomplish the release. There are precautions and steps necessary to ensure that you do not find yourself in over your head during this meeting. Michael Ioane’s book will guide you to staging a successful release.