As a former IRS Agent and Instructor, I am asked all the time how and where does the IRS get their tax levy information?
The answer is very simple and may surprise you. It comes from you. Yes, you usually give them your own tax levy information. The IRS does little to have to find it.
1. If you have written a check to the IRS, the Service codes that information into the C.A.D.E. computer system for future IRS Audit or Collection use.
2. If you have called the IRS, they may ask for the information over the phone. If you have given it to them, the computer is thus marked.
3. If the IRS has secured a financial statement in the past, that information usually stays in the system for 7 years and becomes a part of your file for the duration.
4. If you are divorced or separated, many times that information will come from your spouse who cannot wait to give IRS the information.
5. The IRS can get information from third parties. You never know who may give them information about you.
6. Most of the Tax Levy information comes from your tax return from prior tax years. The IRS simply looks at your W-2’s and your 1099’s. This is the best source of IRS Levies. I would say 95% of all tax levies are generated from this source.
7. The IRS can also get Tax Levy information from your credit report. This provides a wealth of information and a field day for the IRS. If your case goes to the field for a Revenue Officer to work, your credit report becomes a harvest for the Agent.
Lastly and contrary to popular belief, the IRS does not dragnet the banks. They do not have the time or the resources to do that on most cases. They will do that only on high profile, very large dollar, jeopardy and drug cases.