When a taxpayer owes money on taxes, the IRS can seize assets or income held by third parties, such as banks or businesses, through a levy. There are two types of levy forms that the IRS uses depending on what types of assets they are trying to seize: Form 668-A and 668-W.
Not every Notice of Levy has to turn into seized funds for taxpayers. A levy release helps protect assets and income from getting frozen or sent to the IRS. Understanding both types of forms allows you to properly strategize what you can do when immediate action needs to be taken.
What Is Form 668-A?
Form 668-A is a one-time levy for all of the funds or property held by a third party when a taxpayer owes back taxes. A levy on third parties means the property held by the third party for the taxpayer is subject to seizure. For example, say a taxpayer has funds in their bank account. In this case, the bank would be the third party. The IRS could seize funds from that bank account through the bank to pay back overdue taxes that the taxpayer owes.
If the IRS does not collect the full amount owed on the first levy, they could serve Form 668-A multiple times until the debt is satisfied.
What Is Form 668-W?
Unlike the one-time levy through Form 668-A, Form 668-W is a continuous levy. This notice of levy is used to garnish wages, retirement income, or other funds to pay back unpaid federal taxes. An employer who receives this notice is legally obligated to withhold funds from an employee’s paycheck for the IRS. This continues until the levy is released or the tax debt is paid off.
Liberating Your Funds: Releasing Levies with Finesse
Accounts Receivable Levy (668-A): When your client receives a Form 668-A to collect your tax debt, they’re obliged to direct any owed funds to the IRS. But if no money is owed at that time, the levy’s impact diminishes. The IRS would need to re-levy to capture future payments. If luck isn’t on your side and the levy holds, effective negotiation – by you or a tax professional – can secure its release. Remember to request the accounts receivable’s fax number for expedited communication.
Bank Levy (668-A): Bank levies freeze funds available at the exact moment the bank processes the order. Any deposits made after that execution window are safe from that specific levy. If you’re hit with a bank levy, contact your bank for a possible release and ascertain the frozen amount.
You have a 21-day window before funds transfer to the IRS. Effective communication with the IRS, backed by your accountant or attorney, can lead to partial or full levy release. Gather fax numbers from clients or banks for swift resolution.
Wage Levy (668-W): Once Form 668-W lands, reach out to your human resources department for their fax number. Learn the “cut-off” date for levy release. You and your tax expert will then engage the IRS, often demonstrating financial hardship via Form 433-F. Even if complete release isn’t achievable, modification might reduce the garnishment. After liaising with the IRS, provide your human resources’ fax number for a timely release.
Levy Release With the Help of a Tax Professional
While levy notices like Form 668-A and 668-W can be baffling, they’re not the end of the road. That’s where Priority Tax Relief steps in – your beacon of expertise in the realm of IRS challenges. We’re here to help with complex levy codes and urgent matters such as wage garnishments and fines. We don’t just understand – we take action, negotiate, and protect your financial security. Our team of tax attorneys, enrolled agents, and CPAs can get you in touch directly with the IRS through our Tax Help Hotline.
