What is a tax levy?

A tax levy refers to the legal process by which a government entity, typically the IRS or state tax authorities, takes possession of a taxpayer's property or assets to satisfy an outstanding tax debt. This can include wages, bank accounts, real estate, and other types of personal property. The key aspect of a tax levy is its forceful nature; it is a legal action aimed at ensuring that tax obligations are met when voluntary payment has not occurred.

This process often follows several notifications or attempts to collect the taxes owed, allowing taxpayers opportunities to resolve their debts through payment arrangements or other means before the seizure occurs. Other options, such as a temporary suspension of tax payments or a tax exemption, pertain to different aspects of tax law and do not accurately describe the nature of a levy, which specifically involves legally reclaiming assets for unpaid taxes.