Tax Levies in San Diego
& Finding a Tax Levy Lawyer
A tax levy is a legal process by which the Internal Revenue Service (IRS) collects unpaid taxes from a taxpayer. The IRS may seize assets, such as property or wages, to satisfy the debt. This intervention is typically a last resort after other methods, such as payment plans or negotiations, have failed. The program is designed to collect as much of the unpaid tax bill as possible and minimize the financial impact on the taxpayer.
There are many scenarios in which the IRS may place a tax levy in San Diego. This includes:
- The taxpayer neglects or refuses to pay their taxes. If a taxpayer owes taxes and does not make any effort to pay them, it gives the government the right to levy and start collecting payment. This can include wage garnishment, seizing bank accounts, or taking other assets with monetary value.
- The taxpayer does not respond to IRS notices. The IRS sends out various notices throughout the year to alert taxpayers of their tax obligations. If the taxpayer responds to these notices, a levy will likely be placed on their assets if they simultaneously try to pay the taxes they owe.
- The taxpayer makes an error on their tax return. In some cases, taxpayers may make mistakes on their tax returns. If the mistake is large enough, it could result in a tax bill that the taxpayer cannot pay. The IRS may then place a levy on the taxpayer’s assets to recoup the unpaid taxes.
- The taxpayer has an unpaid tax bill from a previous year. Each year, taxpayers are required to file a tax return and pay any taxes they owe. If a taxpayer does not pay their taxes in full, the IRS may carry over the unpaid balance to the following year. This unpaid balance continues to accrue interest and penalties, making it difficult for the taxpayer to catch up. The IRS may then place a levy on the taxpayer’s assets in an attempt to collect the unpaid taxes.
Before taking any of these actions, there are other methods the IRS will typically utilize to collect unpaid taxes. These methods may include:
- Sending out notices. The IRS will send various types of notices throughout the year to alert taxpayers of their tax obligations. These notices will typically request payment and may also threaten legal action if the taxes are not paid.
- Setting up a payment plan. The IRS offers payment plans for taxpayers in San Diego who are unable to pay their taxes in full. This allows the taxpayer to make smaller, more manageable payments over time.
- Negotiating an offer in compromise. In some cases, the taxpayer may be able to negotiate an offer in compromise with the IRS. This is an agreement between the San Diego taxpayer and the IRS that settles the tax debt for an amount that is less than what is owed.
- Advance notice of a third-party contact. The IRS typically contacts taxpayers directly when they are trying to collect unpaid taxes. However, in some cases, the IRS may contact a third party, such as an employer or financial institution. The taxpayer will typically be given advance notice of this third-party contact.
If the taxpayer does not respond to the notices or take any of the steps above, the IRS may then take legal action and place a levy on the taxpayer’s assets.
Once the levy is in place, the IRS will begin collecting taxpayer payment in ways such as:
- Wage garnishment. The IRS may garnish the taxpayer’s wages to collect payment. The amount that is withheld will depend on the taxpayer’s filing status and the number of dependents.
- Bank levies. The IRS may place a levy on the taxpayer’s bank account to collect payment. The amount that is taken will depend on the balance of the account and any outstanding debts.
- Property seizures. The IRS may seize the taxpayer’s property, such as a house or car, to collect payment. The amount that is owed will need to be paid in full to redeem the property.
Delia Law Can Help You With Your Tax Levy
If you are facing a tax levy, take action as soon as possible. This is especially true if you are facing wage garnishment or property seizure that is going to put a strain on your finances. The sooner you act in San Diego, the better chance you have of resolving the issue and avoiding further legal action that can further drown you in debt.
At Delia Law, we have experience helping our clients resolve their tax levies and can work with you to find a solution that fits your unique circumstances. We understand the IRS can be daunting, and we are here to help at each step of the way. Contact us today to schedule a consultation and witness how we can help you resolve your tax levy.
California-Specific Tax Laws
California residents are subject to some of the highest taxes in the nation. The same applies to businesses operating in the state or people living outside of California but earning income from the state.
There are four main types of taxes in California:
- State income tax. For state tax in California, the tax rate for those filing as a married couple range from 1% to 12.3%, depending on the income bracket. If you make under $18,650, you are only required to pay 1% of your income in state taxes. However, the other end of the spectrum imposes a 12.3% tax rate on annual salaries of $1,250,739 or higher. There is also a 1% mental health service tax that is imposed on anyone making more than a million dollars a year.
- Local tax. At the local level, the amount you pay locally depends on the county and city in which you reside. There are a total of 58 counties in California, each with its own tax rate. For example, in El Dorado County, the tax rate is 0.25%, while in Orange County, the tax rate is also 0.25%, but with an additional 1.5% added in for local school taxes.
- Corporate tax. The corporate tax rate in California is 8.84%, which is higher than average nationally. These taxes are imposed on the majority of businesses, regardless of whether they are based in California or operate in the state.
Sales tax. In terms of sales tax, there is a statewide rate of 7.25%, which is again higher than average. However, some areas have rates as high as 10%. These taxes are generally imposed on retail items. Residents and shoppers of the state do get relief from sales tax on some essential items, such as no tax on groceries and prescription drugs, as well as reduced tax rates on clothing, prepared food, and over-the-counter medications.
