Employer Ordered to Pay Employee's Taxes, Plus 50% Penalty, for Ignoring IRS Wage Levy
So powerful that an employer was recently hit with the ENTIRE amount of its employees' overdue taxes, including a Draconian 50% penalty, for failure to hand over funds to the IRS. See U.S. v. Heli USA Airways, Inc., U.S. Dist. Ct. Nevada, 09-CV-01339, Nov. 14, 2011.
In situations where a delinquent taxpayer's property (wages, for example) is held by a third-party such as an employer, the IRS serves a notice of levy upon a third party pursuant to 26 U.S.C. Sec. 6332(a). The U.S. Supreme Court has gone so far as to say that the levy notice creates a "custodial relationship between the person holding the property and the IRS"!
The employer must wait 21 days, then turn over the wages, or it can be held liable for the levy itself, including penalties and interest, as the Heli case proves. In Heli, the court found that even the company CEO's mental problems were not reasonable cause to remove the massive penalty.
This case shows that once a wage levy hits, your employer should be scared as hell that it does not ignore the notice and pay it on time! If the employer pays the employee instead of paying the delinquent employee's wages over to the IRS, the employer is on the hook with major penalties and interest to boot.
If your employer has received notice of a wage levy on you, there is still hope. You have essentially 21 days to put a collection alternative in place, i.e. a request for an installment agreement, offer in compromise, innocent spouse, currently not collectible status or bankruptcy to name a few. Call a local licensed attorney who will quote you a fixed fee (not a pay by the hour outfit) to move quickly and protect your interests. We offer such fixed fees for these situations, and we move fast. Call me today at 1-800-721-7054 to find out more.