5 Things You Need To Know About IRS Bank Levy

What if you got a letter from the Internal Revenue Service, or commonly known as IRS, saying that it has contacted your bank to take money from your account? And what if the bank told you that they need to freeze your account and send funds to the IRS? What has happened? What happened was the IRS took an aggressive action collection and put a levy on your account due to your unpaid tax debt. A bank levy is a legal seizing of property or assets as a payment to your tax debts.  Generally, a bank levy is the IRS’s last resort when they have not received payment from taxpayers, and the taxpayers have not made any payment arrangements for their dues.

Taxpayers who face bank levies from the IRS should be cautious of how potent taxes can be. Ignoring the IRS and thinking that the debt problems will go away on its own is not the answer and will only create more significant problems down the line. When the IRS attempts to communicate, and you know that you cannot meet a deadline, it is best to contact an IRS officer as soon as possible to avoid their aggressive collection efforts.

IRS Bank Levy: What You Should Know

Unlike other tax agencies, the IRS has the power to implement and enforce levies to bank accounts and wages of taxpayers who fail to pay debts. Thus, the best way to resolve a levy is facing the problem before the IRS takes a massive leap in wiping out your funds and assets. However, the legal proceedings of bank levies are heart-wrenching and nerve-wracking. Here are four points you need to know to understand the twists and turns of IRS bank levy:

  1- The IRS should meet the requirements before issuing a levy.

The IRS cannot issue a levy to a taxpayer immediately after the tax liability arises. They should follow a set of procedures before the collection action, while the taxpayers can take steps during this period to prevent bank levies. The IRS can levy once they meet these three requirements:

  • First, the IRS should assess the liability of the taxpayers and issue a Notice and Demand for Payment (tax bill). It is a letter of notice that breakdowns the amount you owe, penalties, and interest accrued on your unpaid balance and demands payment in full.
  •  If you are unable to pay your due amount; and
  • Lastly, the IRS has issued a Final Notice of Intent to Levy and Notice of Your Right to a Hearing at least a month before the bank levy. They can send it in person, directly to your home, place of business, or send it to your last known address in a registered or certified mail. 

Once the IRS has sent the final notice, you should respond by either setting up a payment arrangement or paying the balance in full. If you fail to take necessary actions during the 30-day window, the IRS is free to levy your property.


   2-What can you do after receiving a notice of levy?

Once you have received a notice of levy, you need to take immediate action to resolve your debt in 30 days. If you are unable to deliver satisfactory efforts for resolution, or you fail to pay your back taxes, the IRS will take the aggressive collection action and contact your bank to initiate the levy.

The bank will freeze your bank account for 21 days, which means that you would not have any access to it. The 21-day period is necessary to resolve any ownership issues of the account. If there is no issue on ownership, the bank will send the fund to the IRS, whether you like it or not. In layman’s terms, the IRS can wipe out your bank account in no time.

3-The IRS can release a bank levy.

  • The IRS should release a levy if they have proven that:
  •  You have paid your debt,
  •  You are part of an installment agreement, and the terms do not allow for the tax to proceed,
  • The bank levy contributes to the economic hardship, which means that the IRS found out that the levy prevents you from meeting the necessary and reasonable monthly living expenses, and
  •  Releasing the bank levy will help you pay your owed amount.

However, you should note that the release of a levy does not mean that you do not have to pay your dues. It would be best if you make an arrangement with the IRS to resolve your debts, or they may re-issue a levy.

  4- What to expect when you call the IRS?

If you want to get in touch with the IRS regarding bank levy, you can call the 1-800 number located in the top right corner of the letter of notice. You may wait on hold for 15 to 45 minutes, which is time-consuming and frustrating. You can also write them a message, but there is no certainty of how long it will take for them to process the request. Once you get a hold of the IRS, they might ask you why they should release your funds back rather than paying themselves from a secured fund. 

  5- Tax professionals can help with an IRS bank levy.

The best way to prevent the IRS from seizing your money is to turn to a tax professional. The IRS and most states prefer working with experts, especially when a bank levy is in the picture. Aside from their knowledge of your tax options, hiring a professional will send out a message to the IRS that you are willing to make necessary arrangements.

Moreover, the bank levy involves complex strategies that not all taxpayers can understand. With a tax professional by your side, they can set up a temporary fix to stop bank levy and come up with a long-term solution afterward. 

Seek Tax Resolution Services in Paying Taxes You Owe to the IRS!

Paying your debt to the IRS is essential because it can negatively impact your life in the long run if you fail to do so. If you are a business taxpayer or an individual facing the threat of IRS bank levies, an experienced tax attorney can help you come up with a plan that suits your needs and budget, while navigating your federal and state tax issues. Take your next steps and get a case evaluation with our tax relief experts from Platinum tax Defenders! You can call us at +1-866-866-8053 and learn how we can help you with your back taxes. 

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