A levy is the legal sale of property to pay off a loan. If a person fails to pay his or her taxes, the International Revenue Service may collect the person’s tax return or property. Other assets, such as a bank account, rental income, or a retirement account,
might also be levied by tax authorities.
Levies are the legal mechanism through which a governmental body or a bank can confiscate property in order to collect a loan payment. A levy can confiscate both actual and immaterial properties, such as cash, automobiles, and houses, as well as immaterial and owned by someone else, such as future salaries. Different sorts of levies exist depending on the context. 

TAX LEVY:
The Internal Revenue Code allows levies to be used to recover unpaid federal taxes. The IRS has the right to seize an individual’s property in order to repay a tax debt. Real property such as cash in a bank account, house, automobile, or boat are examples of
property that can be levied. The taxing authority may establish a federal tax lien as a last option to notify other lenders of the taxing authority’s legal entitlement to a taxpayer’s assets and property. The IRS has the authority to collect a borrower’s state tax refund, in which case he may get a Notice of Levy on Your State Tax Refund.

LEVY ON BANKS:

If a lender secures a court judgment against a borrower, the court may impose a bank levy. Depending on the court’s decision, the bank levy normally blocks the borrower’s bank accounts until the whole outstanding debt is returned in full. If the charge is not removed, the lender may withdraw the funds from the bank account and add them to the total amount outstanding.

A bank levy is not a one-time occurrence. A lender may request a bank levy as many times as necessary until the debt is settled in accordance with the provisions of the court judgment. Furthermore, most banks charge their clients a fee for executing a levy on their account.

A bank levy can be triggered by either delinquent taxes or an unpaid loan. Some accounts, such as Social Security Income, Supplemental Security Income, Veteran’s Benefits, and child support payments, cannot normally be levied. A debtor who owes money to the federal government, on the other hand, does not have the same level of protection as if he owed money to a private lender.

GREEN LEVY:

A green levy is a charge on greenhouse gasses or other pollution causes. These levies are meant to encourage environmentally beneficial behavior by increasing the expense of polluting enterprises. Carbon taxes are one of the most prominent green levies, but many local governments have also attempted to decrease plastic waste by hiking the price of plastic shopping bags.

MILL LEVY:

A mill levy, often known as a mill tax, is a type of property tax based on the assessed value of real estate. These taxes are commonly employed by local governments to finance school systems or parks. Every year, a tax assessor values each property in the district, and taxes are apportioned on a percentage basis.

Difference between Garnishment and levy:

A levy is not the same as a garnishment, which the IRS or other lenders can employ to collect payments. A garnishment occurs when a court orders a third party (typically an employer) to divert a portion of a debtor’s salary or income, as opposed to a levy, which permits lenders to remove money from a bank account.

Private lenders, as well as the government, can use garnishments and levies. Federal authorities, such as the IRS, do not require a court order to levy or garnish a person’s assets. Other lenders must present documentation of the overdue loan and get a court
judgment to garnish wages or other income. Garnishments are regularly used to collect on past-due loans or child support. Borrowers may be eligible for some relief if the garnishment would put them in financial jeopardy. The IRS presents sample levy case situations and what you may do about them.

HOW TO AVOID A LEVY?

The easiest method to avoid a levy is to submit your returns on time and pay your taxes on time. If you require additional time to file, you can request an extension, and if you are unable to make the entire amount, contact the IRS and arrange to pay the
remaining in payments. 

Do not disregard IRS billing notices. They don’t go away, and in severe circumstances, unpaid tax debts can lead to prison time. Tax payments can be made in a variety of ways. You may be able to set up a payment plan or settle your tax liability for less than the entire amount owed. Other solutions may exist in some instances.

HOW TO REMOVE THE LEVY FROM YOUR BANK ACCOUNT:

The most straightforward approach to avoid a bank account fee is to refund the debt that caused the levy in the first place, but this is easier said than done. There are, however, alternative legal ways to avoid a bank fee. If you can demonstrate that the levy was the result of a mistake on the lender’s behalf or that you were the victim of identity theft, you may be able to have your account access reinstated. You may also be able to fight the debt or declare bankruptcy, but this would almost certainly necessitate the assistance of a loan relief attorney.

THE BOTTOM LINE:

A levy is one of various options for obtaining payback for past-due taxes or outstanding loans. Levies can also refer to different types of taxes that are levied in order to fund government activities.

The Sixteenth Amendment gives Congress the authority to collect direct income taxes without regard to state census numbers. Prior to the ratification of the amendment in 1909, income taxes could only be apportioned among states based on population. Until the 16th amendment was passed, the majority of government revenue came from customs charges and excise taxes