Here’s part 2 of our series on some of the most common problems our clients bring to us. Read part 1 here, and stay tuned for the next installment.
When the IRS levies your bank, it seizes money (sometimes ALL the money) from your bank account and applies it towards your tax debt. Bank levies are the IRS’s strongest weapon for collecting unpaid taxes, and they can “strangle” you by completely choking off your cash flow. Scary, right?
If you’ve received a notice that your funds are about to be levied, don’t panic – we can help. Here’s a quick overview of what you can expect from a bank levy, and how we can stop the procedure.
How Does a Bank Levy Work?
If you owe back tax debt, the IRS is entitled to seize (levy) the liquid funds from your bank account to pay the debt. They can levy any type of bank account – savings, checking, school bank, mortgage escrow, or even retirement accounts like IRAs and 401ks. Even worse, sometimes the IRS can issue a levy on federal payments like Medicare and Social Security benefits.
Some people think that joint accounts are exempt from bank levies, but that’s not the case. If you’re the debtor and your name is on the account, the IRS can take the money.
Your money won’t be levied without warning. First, you’ll receive a series of letters: a “Notice and Demand for Payment” with the debt amount and a deadline, and then a “Final Notice of Intent to Levy” that gives you a final deadline of 30 days to pay the debt. If you don’t do anything during those 30 days, the IRS can then issue a levy to your bank.
Once the bank has received the levy, they are still required to hold your money for 21 days before releasing it to the IRS. During that 21-day holding period, you have a chance to make payment arrangements with the IRS or prove that the seizure would place you in financial hardship. (We can help you with either of those things.)
If you and the IRS can reach an agreement during the holding period, the money will be returned back to your account and the levy will be lifted. However, if 21 days go by and there is no agreement, the bank must send all the money from your account directly to the IRS.
What Can We Do to Help?
We can take a number of steps to negotiate the release of the levy. We can help you make payment arrangements with the IRS by helping you get set up with a number of programs, including an Offer in Compromise, an Installment Agreement. We can also take steps to get your debt placed in “Currently Not Collectible” status, or prove that you are an innocent spouse.
But remember, you have to get in touch with us fast – preferably as soon as you receive the first notice from the IRS. The sooner you call us, the more we can do to help.
If your bank account is being levied – or if you just have questions – you can call us at 844-841-9857, or schedule a free consultation by submitting the form to the right.
Here’s part 2 of our series on some of the most common problems our clients bring to us. Read part 1 here, and stay tuned for the next installment. When the IRS levies your bank, it seizes money (sometimes ALL the money) from your bank account and applies it towards your tax debt. Bank levies are...
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