What Do You Need To Know If The IRS Has Seized Your Bank Account?
If you owe a debt to the IRS and do not take steps to resolve your tax problems, the IRS will take the following actions (one by one, or all at once);
- Garnishing your wages. The IRS can take a specific amount of your paycheck on a continuous basis.
- File a tax lien on your real and personal property, such as real estate or vehicles.
- Place a hold on available bank funds, up to the amount of the outstanding IRS debt.
NOTE: Retirement funds are also fair game for the IRS, including social security payments and any other form of a pension.
Of the above, the IRS often starts with a bank levy.
The following is what you need to know about a Bank Levy.
IRS must provide notification with appeal rights
The IRS MUST provide you with notification in the form of a “Final Notice of Intent to Levy”. You have 30 days to respond to this notice and/or appeal the pending enforced collection actions. Failure to respond to this notice will give the IRS the right to seize your bank account(s) or take other enforced collection actions.
Once the IRS issues the bank levy, are the funds taken immediately?
Upon the bank acting on the levy notice, they are required hold the funds for 21 days. These 21 days are a period of time to allow you to convince the IRS that the levy was issued in error or that taking the funds would cause an extreme hardship. The IRS is the only one that can release the funds. If you are at this stage, it is time to quickly seek out the assistance of a Certified Tax Resolution Specialist.
How much can the IRS take?
Unlike a wage garnishment that is limited to a specific amount, a bank levy is a one-time seizure of the full amount listed on the notice of levy. This means, if the outstanding IRS debt is $21,000 and you have $5,000 in your bank account, they will seize the entire amount available in the account.. Unless you can convince the IRS to release the funds, in 21 days that money will be sent to the IRS by your bank and the funds will be applied toward your outstanding debt.
Can the IRS continue to take money from my account?
The bank will freeze the funds up to the amount listed on the levy notice. They will do this on the specific day the bank acts on the levy notice. Once the bank has frozen the funds on that specific day, they cannot continue to place a hold on any further funds based upon that levy notice. The IRS can issue a new levy and start the process over again. Unfortunately, we have seen some more aggressive Revenue Officers who have issued levy notices two weeks in a row in an attempt to capture on or more paychecks. Revenue Officers tend to make sure the levies are acted upon by the bank on a day when a paycheck is likely to be deposited.
What do I do if I receive a “Notice of Intent to Levy”?
What you do not want to do is ignore the notice. What you will want to do is contact a Certified Tax Resolution Specialist. The proper way to approach this type of tax problem is to understand your options and to use a systematic approach to the overall solution. Often, this type of situation is the tip of the iceberg and is better handled by a tax problem resolution expert. You certainly do not want to turn this over to someone who is learning at your expense. That is a fast way to lose whatever is in your bank account.
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