by Jay Freeborne , Enrolled Agent
October 29, 2009

The Form 668-A Notice of Levy is sent by the IRS to collect back taxes through an account receivables or bank, freezing the funds held in that account. But it's not permanent! It is just a one-time levy, not a continuous levy. The Form 668-W Notice of Levy is a continuous levy or garnishment placed usually on your wages. Unless you argue/negotiate for it to be lowered or modified, the garnishment will last on your wages until the taxes are fully paid.

Businesses and Banks Are Confused by the 668-A Levy.

Businesses (and to a lesser extent banks) who receive the form 668-A often freak out. "Is this permanent?" they ask. With the IRS potentially scrutinizing them, they don't want to screw it up. Tax professionals frequently have to clarify the rules of 668-A's with these businesses who are supposed to enforce them (or their legal department).

When the 668-A Could Be Continuous.

If you only do business with one client, 668-A's can be considered as continuous, but there's a lot of grey area in this unique situation. If you were our client, we would work to argue that it should be interpreted as a one-time levy.

How Can You Get these Levies Released?

Accounts Receivable Levy (668-A)

If a client of yours receives the form 668-A to collect your back tax debt, the business is technically required to send any money currently owed to you at the time they receive the 668-A to the IRS. But if the company currently does not owe your business anything, then the levy is ineffective. The IRS will have to re-levy if they want to capture future money that the company owes to you. If you are out of luck and the levy is enforceable, you can also get this levy released by effective negotiation by you or your tax professional. Be sure to ask your accounts receivable for their fax number so a "levy release" can be sent to them!

Bank Levy (668-A)

Bank levies freeze the monies in your account currently. But they do not freeze future funds put in the account. In fact you can deposit funds the day of the levy and the new funds should be available to you. If you have had your bank levied, call the bank and get a fax number for a possible levy release and determine how much money has been frozen.

In Accounts Receivable and Bank Levies, you have 21 days before the funds go to the IRS. If you or your accountant/attorney effectively make your case to the IRS, your levy can be released partially or in full. Be sure to get a fax number for your client or bank so a levy release can be expediently sent to them and your funds released.

Wage levy (668-W)

As soon as you receive the 668-W Wage levy, be sure to call your human resources department to a) get their fax number and b) find out what the "cut-off" date is for getting the wage levy released. You and your accountant/tax attorney will then need to contact IRS and show that the garnishment is a "hardship" usually by giving full-financial disclosure through Form 433-F. If you aren't able to get it fully released, you might get the IRS to modify the garnishment and get it lowered. After speaking to the IRS, be sure to give them the human resources' fax number so a levy release or partial-levy release can be sent to your employer.

For 30 years, WATAX has been solving every kind of tax problem. Call us at 1-888-282-4697 or email us a description of your tax issue and we'll contact you.

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