Defining a Levy

• A levy is an order supported by the tax court, which allows the IRS to force a debtor to sell some of his property to settle a debt. To enforce a levy, the IRS must notify a deficient taxpayer that he owes back taxes and that a levy will be placed on his property to collect the amount owed. If the deficient taxpayer does not respond within 10 days, the IRS can move forward by going to court and getting the levy placed on the property. At that point, the taxpayer has 30 days before the property can be seized, so that the debtor can appeal the levy if he wishes. A levy can be placed on a variety of different types of property, including future wages.
  
  

Defining Profit Sharing

• Profit-sharing plans are retirement vehicles offered by employers to their employees. Despite its name, profit-sharing plans are not a determined share of a company's profits, but a discretionary contribution by an employer to an employee fund. The employer generally makes a lump sum contribution into a profit-sharing fund, and then the amount is divided among the employee members according to a set formula. The profit-sharing fund is held by the employers or an organization appointed by the employers, who act as administrators. An employee's share can be withdrawn at any time, but is subject to a 10 percent penalty if the employee is under 59 ½.
  
  

Can Profit-Sharing Plans Be Levied

• All property, subject to specifically listed exceptions, can be levied. The exceptions generally relate to property that relate to basic needs, such as clothing, tools that you need to make a living, or personal affects. Also a percentage of your wages are exempt, in an effort to provide you the resources to provide yourself with food and shelter. All other property, even property that is yours but is held by someone, is subject to levies. This includes retirement funds such as profit-sharing.
  
  

Tax Tips and Disclaimer

• If you have further questions about owed taxes, it is a good idea to consult with a certified public accountant or licensed attorney, as they can best address your individual needs. If you have financial concerns that might make hiring a CPA or attorney difficult, there are alternative options such as Low Income Taxpayer Clinics or the Taxpayer Advocate Service, an independent organization operating through the IRS that provides aid to taxpayers under duress. Contact the IRS to find an LITC or TAS representative near you. Every effort has been made to ensure this article's accuracy but it is not intended to be legal advice.