Tax deadline warning: Who could face frozen bank accounts or withheld wages

The Internal Revenue Service (IRS) has a special action mechanism to intervene in the bank accounts and wages of taxpayers who owe federal taxes and do not seek to regularize their situation after several notices. The procedure is known as levy and authorizes the agency to order a bank to withhold certain funds or an employer to deliver part of the taxpayer's salary directly to the IRS. Authorities withhold wages from those who have postponed this procedure: How is a wage levy triggered? A wage levy, that is, a wage garnishment, works as follows. IRS usually gives the order, and the employer must send a portion of each worker's payment to the tax agency until one of the following situations occurs: The tax debt is fully paid off. The taxpayer reaches another agreement to pay it. The IRS formally releases the levy. The wage garnishment is continuous and affects the worker's payments successively while the order remains in force. However, the full salary is not withheld. The Government sets an amount exempt from garnishment, calculated from the standard deduction and the number of dependents under the taxpayer's care. IRS blocks the bank accounts of those who owe taxes: How does the process work? The authorities can issue a bank levy against taxpayers who owe taxes and whose collection processes have already advanced to the garnishment stage. The agency may also reach assets or rights to assets belonging to the debtor that are in the possession of third parties: Money deposited in bank accounts. Wages. Retirement payments. Dividends. Commissions. Accounts receivable. Income from rentals. Certain rights linked to life insurance. In the specific case of a bank account, when the financial institution receives the IRS order, the available funds reached by the levy are frozen. What should be done when a Final Notice of Intent to Levy is received? When a Final Notice of Intent to Levy and Notice of Your Right to a Hearing is issued, it means that the collection process has already reached an advanced stage and should not be ignored. The taxpayer can act before the levy is executed: Pay the debt indicated by the IRS. Request a payment plan when it is not possible to pay the full amount. Contact the IRS if you believe the debt or amount is incorrect. Evaluate a compromise offer or an offer in compromise if you qualify. Request a Collection Due Process (CDP) hearing to challenge the levy or propose collection alternatives. When the taxpayer receives certain final notices, such as LT11 or Letter 1058, they generally have 30 days to request a CDP hearing. The filing is made using Form 12153. The Final Notice works as one of the last opportunities to regularize, appeal or negotiate the debt before the IRS moves against wages, bank accounts or other reachable assets.