Tax vs Levy
Any individual, firm, corporation, or legal entity will have to make a payment to their country’s government known as a tax payment. The funds that are collected through tax is the largest income that the government receives and is used for the running of government, investment, development, infrastructure, healthcare, public safety, law enforcement, etc. Failure to pay taxes is a punishable offence, and a government entity called the Internal Revenue Service (IRS) or the Tax Office will issue tax levies with the aim of obtaining taxes owed to the government. The terms taxes and levies are clearly explained in the following article, and their similarities and differences and highlighted.
Tax
Taxes are fees that are imposed on corporations and individuals by a country’s government. Tax income is the largest income that the government receives, and it is used for a variety of purposes such as for infrastructure projects, development, to offer social and employment benefits, general administration costs, etc. There are different types of taxes such as income tax, capital gains tax, corporate tax, property tax, inheritance tax, expatriation tax, wealth tax, value added tax, sales tax, etc. Taxes are seen to be beneficial to the development of a country and for the society’s wellbeing. Progressive taxation that charges higher tax rates with income increases also results in a sense of economic equality.
Tax Levy
A tax levy will be imposed in the event that the tax payer fails to make tax payments or fails to work out a tax payment arrangement. In such an event, the tax agency will take measures to seize the assets/funds. The tax agency has the right to seize bank balances, assets, and even order employers to withhold part of the employee’s salary on a periodic basis until the debt is repaid. The tax agency will issue a notice of intent 30 days before the assets are seized, and once such a notice has been issued, the tax payer will have to pay his taxes, except in special circumstances, in which the taxpayer can prove financial difficulty. The taxpayer does not have to pay the amount in one go, and can work out a system under which he can periodically make tax payments.
What is the difference between Tax and Levy?
Taxes and tax levies are concepts that are very closely related to one another. Taxes are charged by the government on individuals and corporations and are used for a number of purposes. Taxes are usually not paid voluntarily and are, therefore, imposed on a company or an individual. In the instance that a taxpayer defaults on his obligation to pay tax, the government enforces something called a tax levy. A tax levy will allow the bank or financial institution to seize the assets of the tax payer. If the taxpayer defaults, the government will sell off the assets that were seized to recover the tax payments that are due.
Summary:
Tax vs Levy
• Taxes are fees that are imposed on corporations and individuals by a country’s government. Taxes are used for the purpose of running of the government, investment, development, infrastructure, healthcare, public safety, law enforcement, etc.
• A tax levy will be imposed in the event that the tax payer fails to make tax payments or fails to work out a tax payment arrangement.
• If the taxpayer defaults on their tax payments the government can issue a levy to seize the assets and recover the amount due in taxes.