A levy is a legal seizure of property to satisfy an outstanding debt, such as a tax debt. It is different from a lien, which is a legal claim against property. A tax levy can involve garnishing wages or seizing assets and bank accounts. The Internal Revenue Service (IRS) can issue a tax levy after it has failed to collect the outstanding tax from the taxpayer or after a tax lien has been ignored. Before issuing a tax levy, the IRS will generally calculate the outstanding tax and send the taxpayer a "Notice and Demand for Payment." If the taxpayer fails or refuses to pay the outstanding tax, the IRS may issue a tax levy.
In addition to tax levies, there are other types of levies, such as mill levies or mill taxes, which are property taxes based on the assessed value of real estate. These taxes are typically used by local governments to allocate funding for school districts or parks. Another type of levy is a green levy, which is a tax on greenhouse gases or other sources of pollution. These levies are intended to incentivize environmentally-friendly behaviors by raising the costs on polluting businesses.
