Tax Levy

What is Tax Levy?

A tax levy is a legal mechanism that allows a government tax authority, such as the IRS, to seize a taxpayer’s assets or garnish their wages to recover unpaid taxes. Unlike a tax lien, which is a claim against property, a levy involves the actual taking of assets such as bank funds, wages, or personal property.

Why Tax Levy Matters

For employers, a tax levy on an employee’s wages requires payroll to withhold and remit a specified portion of the employee’s earnings to the tax authority until the debt is satisfied. Employers are legally obligated to comply with levy notices and can face penalties for failing to do so. HR teams should handle tax levies with confidentiality and in accordance with applicable regulations.