Background

A federal or state tax levy is an enforced collection tool used after notices and demand for payment fail. The IRS or state tax authority can levy property that belongs to a taxpayer to satisfy unpaid taxes. Ownership rules—set by state law and the way title is held—determine how much of a jointly owned asset the tax authority can reach. (IRS Publication 594; IRS levy overview: https://www.irs.gov/businesses/small-businesses-self-employed/levy)

How levies interact with different ownership forms

  • Tenants in common: Each owner holds a specific share. The IRS can generally levy the delinquent owner’s identifiable interest; it cannot automatically take another owner’s separate share.
  • Joint tenancy with right of survivorship: States typically presume equal ownership. The IRS can levy the delinquent owner’s interest, but state law can affect whether the IRS can force sale of the whole property.
  • Community property states: Community assets may be available for collection of either spouse’s tax debt in some circumstances. State community-property rules are decisive here.

Real property vs. liquid accounts

  • Real estate: The IRS commonly files a Notice of Federal Tax Lien against the taxpayer’s interest. To actually remove or sell the property, the IRS must follow legal procedures; in practice, the agency often forces sale only after other remedies fail. A levied sale can lead to distribution of proceeds according to ownership shares, but disputes commonly require court action.
  • Bank and brokerage accounts: The IRS can levy a joint account and often freezes the available funds. A non-liable co-owner can claim exemption by proving the portion that belongs to them, but that typically requires documentation and a prompt claim. The Consumer Financial Protection Bureau explains rights and procedures for government levies on accounts (CFPB guidance).

Immediate practical steps (priority actions)

  1. Review notices closely and confirm the taxpayer named on the levy. The IRS must send a Notice of Intent to Levy and a Final Notice before levying most property. (See IRS levy rules.)
  2. If you are a non-liable co-owner, document your ownership percentage, deposit history, and any separate funds. This evidence supports a prompt claim for release or refund of funds taken from a joint account.
  3. Contact the IRS Collection Division immediately. Options that can stop or reverse a levy include full payment, an accepted Installment Agreement, an Offer in Compromise, or a proof-of-non-liability showing. For details on getting a levy released quickly, see the FinHelp guide: How to Get a Federal Tax Levy Released Quickly (/glossary/how-to-get-a-federal-tax-levy-released-quickly/).
  4. If the levy is imminent or funds are frozen, follow the steps in FinHelp’s Immediate Steps to Protect Assets When Facing a Tax Levy (/glossary/immediate-steps-to-protect-assets-when-facing-a-tax-levy/).
  5. Consider filing for relief where applicable: injured-spouse claims protect joint-income tax refunds (separate process), and innocent-spouse relief addresses liability on joint returns—not necessarily property levies—so seek counsel.
  6. If collection actions seem improper, request Collection Due Process (CDP) rights or contact the Taxpayer Advocate Service (Form 911) for urgent review.

Common outcomes and legal remedies

  • Partial recovery: Non-liable co-owners often recover their share after proving their interest; recovery may require administrative claims or litigation.
  • Sale or forced partition: If the IRS forces a sale to satisfy the taxpayer’s debt, proceeds are distributed according to ownership shares—again, state law governs the calculation.
  • Negotiated resolution: Many levies are resolved by arranging payments or proving lack of taxpayer interest in the asset.

Practical tips from practice

  • Keep clear records for joint accounts: regular statements, deposit sources, and transfers make it easier to prove non-liability.
  • For business partners and nonspousal co-owners, consider formal agreements that document ownership percentages and rights to distributions.
  • When possible, avoid placing large personal or third-party funds in an account titled with someone who has unsettled tax issues.

Related resources

  • Understanding a Tax Levy — FinHelp glossary (/glossary/understanding-a-tax-levy/)
  • How to Get a Federal Tax Levy Released Quickly — FinHelp guide (/glossary/how-to-get-a-federal-tax-levy-released-quickly/)
  • Immediate Steps to Protect Assets When Facing a Tax Levy — FinHelp checklist (/glossary/immediate-steps-to-protect-assets-when-facing-a-tax-levy/)

Authoritative references

Professional disclaimer

This article is educational and does not replace personalized legal or tax advice. For decisions affecting your property or tax liability, consult a qualified tax attorney or licensed tax professional.