One of the methods the IRS uses to collect past-due taxes is the levy. It has the authority to work with third-party financial institutions to seize cash from your bank account (bank levy) or with employers to intercept your paycheck (wage garnishment or wage levy).
Not all levies work the same. The levy on wages is “continuous.” In other words, once the levy is issued, the employer is instructed to submit payments to the IRS each pay period until the tax liability is paid in full or until the IRS otherwise releases the levy. But the bank levy doesn’t work this way. A bank levy affects only the funds that are in a specified account when the levy is issued. If the IRS wishes to levy the account at a later date, it must submit another bank levy. A levy on self-employment income works much like a bank levy in the sense that it is not continuous. The levy on self-employment income is submitted to the third-party payor, and that person or company has a one-time obligation to turn over everything that is owed to the delinquent taxpayer.
The non-continuous nature of some levies is seen as an impediment to collections. However, the IRS is trying to get this changed legislatively.
The Small Business/Self-Employed Division recognized the barriers the ROs [Revenue Officers] face when taking levy action and has taken some corrective action. The Small Business/Self-Employed Division is preparing a legislative change proposal to expand continuous levies on additional income sources. I.R.C. § 6331(e) and § 6331(h) permit the continuous levy of salary and wages and certain other payments from the time of issuance until the levy is released. The IRS has identified four additional categories of non-wage income that could be levied in a manner similar to wages and salary: non-employee compensation, rental income, royalties, and fishing boat proceeds. These income sources totaled approximately $1.4 trillion for Tax Year 2009. The proposal would expand the continuous levy authority to these additional categories of income and may increase revenue and assist taxpayers in becoming compliant through the use of additional collection options.
~ TIGTA Report #2012-30-007
It is beyond me how this change would “assist taxpayers.” Taxpayers don’t need any “additional collection options”! If this becomes law, it would be a major victory for the IRS.