IRS Bank Levy: Bank Account Garnishment Laws & Process
What Is A Bank Account Levy or Bank Levy?
A bank account levy is one of the most common forms of a Tax Levy used by the IRS to collect back taxes owed within the law. The IRS will notify your bank and will send you a notice of an intent to levy. You normally have 21 days to release the levy or stop it as your bank will hold funds for 21 days before it releases it to the IRS. The IRS will continue to seize amounts within the bank account until it has taken enough money to cover the taxes owed plus interest and penalties. However, if you act quickly, you can limit the damage and get in control of the situation.
When a Bank Levy Is Used & Requirements of IRS before Implementing
A bank levy is one of the preferred methods of levy used by the IRS because they can quickly and easily recoup large amounts of unpaid taxes with minimal effort on their part. The IRS will look at your financial situation when determining what type of levy to use. Once the 30 days have passed the IRS will most likely contact your bank to see the number of funds in your bank account. If there are sufficient then they will immediately require the bank to freeze your account in order for them to levy. If you do not have sufficient funds in your account they most likely won’t use a bank levy and will look at your employment situation and determine if they can the wage garnishment method. The IRS does have a process that it follows before levying someone’s bank account and the most likely won’t levy an account until the following 3 conditions have been satisfied:
- The IRS assessed a tax amount owed and demanded payment of the taxes owed
- After the notice was received by the taxpayer, the taxpayer failed to pay or resolve the taxes owed in another manner
- The IRS sent a final notice of intent to levy 30 days prior to implementing a levy
Once those three conditions have been met they IRS will contact your bank and make a determination if a bank levy will be the appropriate method to seize funds in order to satisfy unpaid taxes.
Options to Handle an IRS Bank Account Levy
Depending on your financial and tax situation you will need to take different actions to handle your IRS bank account levy. An IRS bank levy can but stopped but it is important to act quickly since you will not have much time to stop the IRS once a bank levy has been implemented.
There are many different methods to stop an IRS bank levy. The method you use really depends on your financial situation. Understand the different methods that are available so you can make a determination as to what method would work best for your situation. The IRS prefers to resolve a tax problem in another manner than a levy so they are willing to work with the taxpayer, even this late in the collection process.
If for some reason you do not agree with the levy you do have the right to appeal. Even if the 30 days have passed since you received the “Final Notice of Intent to Levy and Notice of Your Right to a Hearing”, you can still file an appeal. The only difference in filing for an appeal after the 30 days are up is that you will not be able to go to court to challenge the appeal decision made by the IRS. The appeal process is very fair and is done so by a third party that is not biased in any way so you can be assured you will have a fair hearing.
When dealing with an IRS bank account levy it is highly suggested that you use a tax professional to help. Normally when resolving problems with the IRS they are willing to work with the taxpayer but the problem with resolving a bank levy is that it is very late in the IRS collection process and the IRS has already lost trust in you and has determined that you are unwilling to work with them on coming to an agreement. Once you hire a tax professional to resolve your problem on your behalf this shows the IRS that you actually are willing to resolve your tax problem and they will be more willing to come to a fair resolution, rather than enforcing the bank levy.
How To Release a Bank Levy
Understand the different methods to stopping the IRS from garnishing your bank account. Find the best method to release based on your financial situation
Find out what you can do about your bank levy. The IRS gives many options for you to stop the levy, find the best solution. Our experts can help if needed.
IRS CP Notice 90/297 Notice of Intent to Levy
What this notice means and what to do. A notice of intent to levy should not be ignored. The IRS will levy unless action is taken on the tax payers end.
Bank Levy Help
Do you need help stopping a bank levy? End the levy quickly with the assistance of our experienced team of tax professionals. Understand the benefits of hiring a tax professional to help with your bank levy.
More Tax Levy Information
Other forms of IRS Levy. Solutions to dealing with different forms of IRS levies.
Appeal IRS Tax Levy
If you don’t agree with the IRS’s choice to levy you have the legal right to appeal. Understand how to file for an appeal and how the process works