What is a 'Levy'
A levy is the legal seizure of property to satisfy a debt. In the U.S., the Internal Revenue Service (IRS) has the authority to levy an individual's property, such as a car, boat, house or property belonging to the individual that is held by someone else, including wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, commissions or the cash loan value of a life insurance policy. A levy differs from a lien because a levy takes the property to satisfy the tax debt, whereas a lien is a claim used as security for the tax debt.
BREAKING DOWN 'Levy'
Certain procedures must be followed and requirements met before enforcing a levy. In the U.S., for example, the IRS must first assess the tax and send a Notice and Demand for Payment, and after the individual's neglect or refusal to pay the tax, send a Final Notice of Intent to Levy and Notice of Your Right to a Hearing (levy notice). This must be sent at least 30 days prior to the levy, and can be given in person, left at the person's home or place of business, or sent to the person's last known address. A state tax levy applies to unpaid state taxes.