How Georgia Tax Levies Work

3 weeks ago

Property being seized for non payment of Georgia state taxes

What to Expect and How to Stop Them

Much like the IRS, the Georgia Department of Revenue (DOR) attempts to collect taxes via voluntary payment whenever possible. However, when taxpayers do not pay voluntarily, the DOR has the legal right to eventually force payment by seizing property and using the proceeds to cover a taxpayer’s tax liability.

If the Department of Revenue has notified you that your assets are at risk of levy or you have already had assets levied, learn more about your rights and how to protect your financial stability as you navigate your state tax issues.

Key Takeaways

The Georgia DOR may levy your assets if you don’t pay your state taxes.
The DOR typically only turns to levies after multiple communication efforts have failed.
Bank accounts, wages, real estate, and vehicles may all be levied by the DOR.
The Notice of Tax Delinquency requires the third party holding your assets to freeze them.
You can work with the team at Wiggam Law to protect your assets from levies.

An Overview of Georgia Tax Levies

When a taxpayer owes money to the Department of Revenue, the DOR may take steps to force payment. In particular, they may use a levy to seize your wages, bank accounts, or assets.

A levy is a seizure of assets that satisfies your tax debt in part or in whole. When the DOR seizes funds, that money is applied to your tax debt. When they seize other property, they can legally sell that property and use the proceeds to cover your tax liability.

What they seize depends on what you have, what it’s worth, and how much you owe. The DOR will often seize bank accounts, business assets, real estate, and wages.

If you are looking into Georgia tax levies because you received a Notice of Delinquency, please note that a Notice of Delinquency is not the same thing as a levy, but it generally leads to a levy. If you or parties in possession of your property have received this notice, the Department of Revenue has frozen your assets in preparation for a levy. When the DOR issues a Notice of Delinquency, the third party must hold your assets for 30 days. The DOR can then enforce the levy and seize the property.

What Makes Levies Different From Liens

Liens and levies are both aggressive tax collection actions, and as a result, the differences between them often confuse taxpayers.

Liens

In Georgia, the official term for a tax lien is a state tax execution. The Georgia Department of Revenue issues a lien/state tax execution when a taxpayer has failed to pay their tax debt and the Department wants to protect its right to secure payment. The state tax execution is a legal claim to the entirety of your property.

These liens are generally recorded with at least one county Superior Court. At that point, your tax debt becomes public record, and the Department of Revenue may move forward with enforcement actions. On top of that, there is a 20% collection fee added to your tax bill when the DOR must file a state tax execution.

Levies

In contrast, a levy is the actual act of seizing a taxpayer’s property and using it to pay off their tax debt. While a lien protects the government’s right to claim your property, a levy involves them actually taking ownership of your property.

Note that a lien often precedes a levy. If you receive a Notice of State Tax Execution, you’ll notice that it outlines what will happen after a lien. In addition to interest accruing each month, the Department “will initiate any appropriate collection actions.” While they may give you additional chances to settle your tax debt, this also allows them to pursue a levy.

Why the Department of Revenue May Issue a Levy

The Georgia Department of Revenue does not move right to issuing levies when taxes are unpaid. In fact, any levy they issue will likely come after multiple notices in the mail and attempts to secure voluntary payment. If all other efforts have been unsuccessful, they may choose to levy your assets as a last resort. In many cases, they file a state tax execution first. This protects their right to your property while still giving you the chance to clear your tax liability.

If you owe sales and withholding taxes as a business owner, the state may move more quickly to levy your assets. This is because sales and withholding taxes are never a business owner’s property; the business owner is meant to collect them from customers or employees, deposit them on their next due date, and file the necessary tax returns. Failing to do so is largely viewed as theft of government money by the Department of Revenue. Contact a Georgia business tax attorney to get help in this situation.

Instead of starting with a state tax execution, they may simply issue a Notice of Delinquency and move immediately to levy assets.

Notices to Look for in the Mail

Before a levy is issued, the DOR may send several different notices to inform you of your obligations, your rights, and their next steps. These notices include:

Notice of Intent to Offset, letting you know that the DOR may seize your tax refund to pay for your tax liability
Notice of Proposed Assessment, informing you that the DOR plans to assess additional taxes due to new information or tax forms
Official Assessment and Demand for Payment, which is sent if you do not dispute the proposed assessment
Notice of State Tax Execution, telling you about the lien placed on your property, also provides information on requesting a payment plan and appealing their decision
Notice to Taxpayer of Rights Against Levy of Money and/or Other Property, informing you of your rights if certain levied assets are not subject to garnishment

Tax Liabilities That May Lead to Levies

Almost any type of tax debt can lead to a levy, including:

Sales and use tax
Withholding tax
Individual and corporate income tax

Assets the DOR May Levy

Any assets you own, even those you co-own with another party, may be levied by the state to cover your tax liability. Commonly levied assets include:

Wage garnishment: The state may garnish your wages to satisfy your tax debt. The garnishment order remains in place until the tax debt is paid off in full.
Bank levy: If you wake up one day and your bank account is frozen, it’s likely due to a pending bank account levy. The Department of Revenue freezes your account, gives you time to challenge the levy, and then seizes the funds in your account. Certain funds cannot be seized in a levy, so you may want to discuss your concerns with a tax professional if your funds come from a variety of sources.
Business assets: Business assets are often levied to cover past-due taxes. This may prevent you from continuing to operate your business while your assets are in dispute.
Vehicle: Vehicles can be levied and sold. The proceeds are then applied to your tax debt.
Real estate: If you are delinquent on your taxes, the DOR may seize your home and sell it.

Once an asset has been levied or a garnishment is underway, it can be very difficult to stop, which is why it’s critical to work with an experienced Georgia tax professional. Ideally, however, you should avoid the levy whenever possible.

How to Avoid a Tax Levy

There are several ways you can avoid a tax levy and protect your financial well-being. If your assets have not yet been levied, you’re in a relatively safe position—but you should act quickly to prevent any new collection actions. You can reach out to the Georgia Department of Revenue or a tax professional to discuss your tax debt and ways to avoid a levy.

Paying in full is obviously the quickest way to stop collection actions, but it is rarely an option for those who have reached this part of the collections process. If you can afford a monthly payment, an installment payment agreement may help you prevent new levies and pay your tax debt in full. Certain taxpayers can qualify to settle their tax debt for less than their full balance via a Georgia offer in compromise.

Upon receiving a Notice of State Tax Execution, you should assume that the government is preparing to levy your assets. The lien claims a right to your assets; a levy enforces it. You may be able to stave off a levy if you have reason to believe that the lien was improperly executed. Your Notice of State Tax Execution includes information on sending a petition to the Georgia Tax Tribunal.

Assets Already Levied? How to Respond

If the state has already started the process of levying your assets, you are quickly running out of time. You can appeal or protest the levy, which temporarily stops the collection and gives you the chance to make your case to the Department of Revenue. If you receive a notice regarding your rights against levy of certain funds, check the list of funds that they cannot levy. This includes certain types of Social Security payments and potentially funds owned by a third party also named on the account. You can then request to have those funds reinstated.

Bankruptcy may be an option, as the automatic stay might pause the levy and allow you access to your assets while your bankruptcy case goes through the courts. However, this is a complicated area of law, and whether or not your case pauses the levy depends on the type of bankruptcy you file and the type of tax you owe.

How a Tax Professional Can Help

If you are facing a potential levy and wondering if it’s time to talk to a tax professional, know that time is of the essence when facing enforced collection actions. If you’ve received an official notice from the DOR indicating that they plan on levying your assets, talking to an attorney can lay out a clear path to regaining your assets and getting caught up on your taxes.

A tax professional can also be a great resource if you are uncertain whether certain forms of income are exempt from levy or if your frozen bank account is causing severe financial hardship.

Are you looking for ways to resolve your tax debt? Talk to a tax professional about an installment payment agreement or offer in compromise.

We’re also here to help when you are in an urgent situation. Perhaps you’re facing aggressive collection efforts from both the Department of Revenue and the IRS, or your business is at risk because the DOR has frozen your business assets.

Levies can cause serious financial distress, and it’s important to move quickly if the DOR is planning enforced collection actions. The team at Wiggam Law is committed to helping you navigate your complex tax issues. Schedule your consultation online or call us at 404-609-1300.

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Frequently Asked Questions

What is the difference between a Georgia tax lien and levy?

A lien outlines the government’s claim to your assets. A levy actually enforces that claim by seizing your assets and handing them over to the Department of Revenue.

Can the DOR levy my wages or bank account without warning?

The Department of Revenue cannot generally levy your wages or bank account without warning. This is why we recommend reading all communications from the DOR immediately and responding promptly. However, they can issue a Jeopardy Assessment for immediate collection if they believe that you plan to leave Georgia, conceal yourself or your property, or otherwise put the collection of the tax in jeopardy.

How long do I have to respond to a levy notice?

After you receive a Notice of Delinquency, the third party holding your assets must do so for 30 days before the state can seize them.

What should I do if I receive a Notice of Delinquency?

You should immediately reach out to the Department of Revenue or a tax professional to figure out how to protect your assets and pay your taxes off via other means. You only have 30 days to respond.

Can I get a levy released if I can’t afford to pay?

The DOR may be willing to negotiate a levy release if releasing the levy will allow you to use the proceeds of a sale to pay off your tax liability. You should talk to a tax professional about this option.