Today's post concerns Continuing Levies. A continuing levy operates as the names suggest, it is ongoing until it is released by the IRS or fully paid. A continuing levy seizes what the taxpayer earns and is usually used on wages and routinely paid commissions.
A continuing levy causes economic hardship for taxpayers as it seizes everything above the taxpayer's standard deduction amount. Let's take a look at how this works. The standard deduction for a single taxpayer was $12,400 for 2020. The IRS will take the standard deduction and divide it by the pay periods. If I received $60,000 a year as a salaried wage earner ($5,000 per month) the IRS would allow me $1033.33 ($12,400/12) and take everything else above that to pay my back tax debt. OUCH! The IRS designed the continuing levy to hurt and it does!
The continuing levy is supposed to hurt so that the taxpayer will contact the IRS and deal with the back tax debt. Remember the IRS has sent notices and given the taxpayer chances to contact the IRS and work something out before this levy was put into place. By the time a continuing levy is put into place, the IRS has waited as long as it is going to and is going to force the taxpayer to do something about the issue! Filing a continuing levy and taking most of the taxpayer's income will definitely motivate a taxpayer to contact the IRS and work out an arrangement!
If you or someone you know is dealing with levies or back tax debt, please feel free to contact me at 702-469-9426 or cstevens@numbercruncherllc.tax.
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