No, but the IRS can make you do something to yourself that may be more painful: The IRS can make you levy yourself and force you to send your own money to them — or else! Read more to learn the strange reasons why, if you owe money to the Federal government; the IRS won’t let you be safe from…well, yourself.
Whenever you owe money to the IRS, the IRS starts robo-mailing a series of exciting-to-read notices to taxpayers. The first is a bill, then another bill, and then a reminder to pay, then another letter, and then a Final Notice of Intent to levy.
Too bad the 16th amendment is not a person
Many taxpayers really don’t want to deal with a tax bill, so they just ignore these notices — wishing the problem away to the land of ghosts and fog (they hope). And who could blame them, right? Owing money to the Federal government is not a lot of fun (nor does the IRS increase the entertainment value). And that’s too bad. Because once that last letter is ignored, the IRS is free to levy (or garnish) wages and bank accounts at will. For the self-employed and for businesses, the IRS figures out who sent out 1099s in previous years, and sends out levies to those customers who issued 1099s. And for employees, the IRS sends out levy notices to employers who issued W-2s.
Which brings us to one of our new clients, Mr. Realtor (not his real name). Mr. Realtor owned Magic Realty of Manhattan LLC (not his real business name). He had employees and put himself on the payroll as well. He ignored his tax bill as described in the paragraph above, and the IRS sent a levy notice to Magic Realty of Manhattan LLC to levy the wages of Mr. Realtor. Mr. Realtor called us to ask if he could ignore the levy. We were concerned, because even if he didn’t have the levy to worry about, he had a big tax problem he needed to solve. So we met with him. We took a look at the levy and told him, that in fact, yes, because he was on his own payroll, he had to levy his own wages. We added, however, that if he was no longer on the payroll, the levy would be ineffective. Regardless, in these situations, negotiating with the IRS is a better idea, and Mr. Realtor agreed.
It’s always better to not have to debate whether or not a levy applies and instead focus on getting the levy lifted. Levies are mean, awful things that need to go away as quickly as possible. The IRS may have issued one levy, but it doesn’t stop them from sending out more and more…until you are blue (and black) in the face.