Do you have unpaid taxes in Illinois? You might find yourself facing an Illinois tax levy. This means that after sending multiple notices, the state can take money directly from your wages or your bank account.
The Illinois Department of Revenue (IDOR) is similar to the IRS, but at the state level, and it’s just as relentless about collecting past-due taxes. IDOR can utilize levies in several forms to collect debt from unpaid, overdue tax or returns.
Due to the severity of this collection method, it’s important that you file and pay your state taxes in a timely manner. But if you find yourself facing a levy, the experienced Illinois tax debt lawyers at Gordon Law are here to help!
Let’s take a closer look at the levy process in Illinois, how it can affect you, and how to stop an Illinois tax levy.
What is a Tax Levy in Illinois?
Like an IRS tax levy, an Illinois tax levy is a method the state government uses for collecting debt from delinquent taxes. This is a serious situation to find yourself in, as a tax levy is usually a last ditch effort by the collection agency.
Through these levies, the Illinois Department of Revenue holds the authority to place a levy on both your wages and your assets, specifically your bank accounts. Even though you will get fair warning before the levy is set in motion, we know this can still come as an unwelcome surprise. But you don’t have to face this alone. It’s easy to get overwhelmed by debt, and we’re here to help you find the right path to resolve the situation.
Illinois Tax Levy Process
Like many taxpayers, you might first notice an Illinois tax levy when you see payments to the Illinois Department of Revenue deducted from your paycheck. However, this only happens after the state has already attempted to collect overdue tax through other methods.
If a levy is enacted, it can be difficult to reverse. Not only are we here to help you navigate these rough times, we’re also here to make sure you have a good grasp on the process leading up to a levy.
Here’s a simple walkthrough of how tax levies work in Illinois:
- A bill is sent for any Illinois taxes not paid when you filed
- The Illinois Department of Revenue sends at least 2 notices to the address on file
- Levy is placed on your wages OR bank accounts
Depending on which levy is imposed on you, the timeline and circumstances will differ.
Types of Illinois Tax Levies
Whether it’s unfiled returns or unpaid tax debts that you’re facing, the Illinois state government has various routes to collect the debt they’re owed if you don’t pay on time. Let’s take a closer look at the state’s possible tax debt collection actions:
Levy Against Your Wages
Under this type of levy, the state can garnish against your wages, commissions, salaries, or bonuses. There are certain stipulations that this levy must follow:
- You will be notified of the delinquent amount you owe 10 days prior to the wage levy being sent to your employer
- Up to 15% of your gross pay must be deducted by your employer
Unfortunately, this does mean the state will notify your employer of your tax debt so that funds can be deducted from your paycheck.
Because the levy is effective until the amount is paid in full, your employer is required by law to continue withholding your wages until then, at which point the levy is released. Finding yourself in this situation is sure to cause a lot of stress. You’ll want to make this problem go away ASAP, and that’s where our team of experienced tax debt lawyers come in to help.
We know how much a tax levy can impact your life and how awkward it can be to have the state contact your employer. We’ll work tirelessly to ensure you get back on your feet as fast as possible.
Levy Against Your Assets
If a levy is not placed against your wages, it will be placed against your assets, typically through your bank accounts. As with the wage levy, you will receive notification of the amount owed at least 10 days prior to the levy being issued. When a levy is placed on your assets, the following conditions apply:
- For 20 days, the bank will hold all money within your account up to the delinquent tax total, including penalty and interest. This gives you a chance to work with the Illinois Department of Revenue and try to get the levy released.
- Once the 20 days have passed, the bank will forward the money to the Illinois Department of Revenue.
- The levy can apply to other assets besides your bank accounts, including:
- Dividends or interest from insurance policies
- Interest on bonds
- Rental money owed to you
- Certificates of deposit
- Contractual payments
Other Tax Debt Collection Methods in Illinois
Illinois Tax Liens
On the more common methods of debt collection, a lien can be placed on either your personal or real estate property. Commonly, any enacted lien is enforceable for up to 20 years after issuance. Other key points about liens include:
- You are responsible for paying both filing and release fees
- Until the amount due is completely repaid, property under the lien cannot be sold
- Any lien that was issued in error will be released
It’s important to remember that any lien placed on your property will severely impact your credit score, and the lien will be available for anyone to see in a public database.
Seizure of Property
In order to collect the necessary amount, including interest and penalties, the state can seize both personal and real estate property you own. This can include things such as:
- Business assets
- Cars
- Home
Your property cannot be seized until a lien has been filed. You will be notified at least 10 days before the property is seized.
Business Certificates or Professional Licenses
Should you hold a professional license or own a business at the time you have a delinquent tax debt, the state can refuse to reissue any business and professional licenses you hold, and even suspend or revoke ongoing proceedings for said licenses.
Revoke Liquor License
If your business holds a liquor license, Illinois tax debt can be extremely damaging to your operations.
IDOR may bring your case to the Illinois Liquor Control Commission as a result of past-due taxes or neglecting to file either general business taxes or state sales tax. If your liquor license is denied renewal or is completely revoked, the state will not reinstate your liquor license until the debt is fully repaid.
Business Taxes
In cases where you are found personally liable for any interest, tax, or penalty a business owes on past-due taxes, you will be given 60 days after you receive the initial notice to argue or protest the decision. If this happens to you, contact our team of experienced business law attorneys and we’ll get you through this difficult time.
Sales Tax Business Certificate Revocation
Furthermore, if your business has an active sales tax business certificate, the Illinois state government can attempt to revoke your certificate, through a hearing, if you have outstanding sales tax or have neglected to file your sales tax returns.
Can Illinois Tax Levies Be Released?
The simple answer is yes, a tax levy in Illinois can be released. The most common way for a tax levy to be released is for you to fully pay the amount owed from your delinquent tax debt. If this is not possible, and your debt is over $20,000, consult a tax attorney to discuss your options.
Fight Illinois Tax Levies With Help From Gordon Law
There are many ways you can stop the Illinois tax debt collection process. The easiest and fastest way is to work with an attorney, like the team of experienced Illinois tax attorneys at Gordon Law.
Our Chicago lawyers have years of experience resolving tax problems and reducing tax debts by thousands, or even millions, of dollars. Almost half of our tax resolution cases are against the Illinois Department of Revenue, so we know all the insider tricks to help resolve your case favorably.
Get started on a path to financial stability by scheduling a free consultation today. We look forward to helping you get back on the right track.
