What Can I Do If the IRS Places a Levy on My Bank Account?
Before placing a levy on your bank account, the IRS must notify you in writing via mail. It is a common misconception that the IRS is above the law and can do anything, but in reality, the IRS is legally obligated to inform you before taking any action against you.
With a bank account levy in place, you will find it very difficult – if not impossible – to enjoy any financial freedom, so you’ll want to resolve your tax problem as quickly as possible.
If you owe back taxes, the IRS will send you a Notice of Intent to Levy, which gives you 30 days to make restitution, either by filing an appeal, paying the taxes you owe in full, entering into a payment plan, or a number of other options. If you make no attempt to rectify your situation within those 30 days, the IRS go into your bank account and take what they believe you owe them. But remember that you still have time – as long as you act fast.
Your best bet is to appeal the Notice of Intent to Levy. This will, at the very least, slow down the bank levy. You will typically have 30 days from the date the notice was received to appeal. You should only go down this road if you disagree with the levy. Some common reasons for disagreeing with the levy are if you:
- Have already entered into an installment agreement
- Submitted a request for an offer in compromise prior to receiving the notice
- Filed for innocent spouse relief
- Were never appropriately assessed with the tax liability
- Were not given a chance to dispute the tax amount owed
Once the levy goes into effect, your bank account is essentially frozen. In some cases, only part of your money may be seized, but this is dependent upon how much you money have in your account, as well as exactly what you owe the IRS in back taxes.
How to Stop the IRS from Seizing Your Bank Account Funds
- Pay the IRS in Full
Paying the IRS in full is the most obvious way to remove the bank account levy. One you pay off your tax bill – including interest and penalties – the IRS will immediately stop the levy and give you back control of your bank account.
- Enter into an Installment Agreement
An installment agreement is the most common way to pay back the IRS when you’re unable to pay in full. Having an installment agreement in place allows you to pay back your taxes in monthly installments until the full amount is paid off. Also, with an installment agreement in place, you are considered in good standing with the IRS as long as your monthly payments are on time.
- File for an Offer in Compromise
An offer in compromise allows you to settle your taxes for far less than the total amount owed. This is not an easy filing and is typically rejected by the IRS. Do not use this as a stalling mechanism because it can get you in more trouble than you are already in. If you want to consider this option it is a good idea to speak with a qualified bank levy professional to determine whether this is the right option for you.
Generally speaking, it is more difficult to get a bank levy released than it is to get a wage levy released. That said, stopping a bank levy is still possible if the right steps are taken, so it’s usually to your benefit to request a hearing and hire an experienced tax professional who can help resolve your situation.
Bank Levy-Related Topics & Help
Back Taxes Frequently Asked Questions
Common questions taxpayers have about back taxes and the different problems and situations that arise from owing or not filing taxes.
5 Methods to Release a Bank Levy
There are 5 commonly used methods to get a bank levy released. Here are the details on each method and guides to do-it-yourself.
What if the IRS Garnishes Your Wages?
Wage garnishment is a more common type of levy over a bank levy. Know what you can do if the IRS decides to garnish your wages.
IRS Bank Account Levy Guide
Understand what a bank levy is, when they are used, your rights and the options you have to handle the levy.
Protecting Assets from the IRS
If the IRS levied your bank account once and didn’t get all the money that they are owed, expect them to come back. Here are some tips to protect your assets from the IRS while you come to a resolution with them.
Tax Levy Guide
Understand what a levy is, why and when they are filed, effects, types, and what you can do to stop an IRS levy.
Help Removing an IRS Bank Levy
Our partnered experts are experienced in quickly stopping bank account levies. Talk with one of the experts to see what they can do for you. Read more here about how they can help you with your tax problem.