IRS Bank Levy Overview: Rules and What to Do
An IRS bank account levy is when the IRS seizes funds directly from your bank account to cover back taxes you owe. Usually, the IRS contacts your bank about your taxes owed. Next, your bank must freeze your assets for 21 days from the day it receives the IRS notice. Consequently, if you don’t take action during that time, the bank sends all the funds to the IRS.
An IRS bank levy will only impact the current funds in the account. In fact, once your bank activates the bank levy, it will not affect any future deposits. The IRS can issue another bank levy later. However, this rarely happens.
Usually, this is the last line of defense for the Internal Revenue Service. The IRS only uses this enforcement collection method after trying to contact you several times without getting a response. To understand more about bank levies and how to stop them, explore the information in the links below.
What is a Bank Account Levy? How it Works, What to Expect
An IRS bank account levy allows the government to take funds from your bank account to pay off your tax liability. The IRS will send you a notice of intent to levy your bank account. Then, the agency will send a notice to your bank informing them of the levy and specifying how much money needs to be withdrawn from your account. Once the funds are withdrawn, you will have 20 days to request a hearing with the IRS to explain why the levy should be released. If you do not request a hearing or if the IRS does not release the levy, the money will be used to pay off your tax liability. In some cases, the IRS may also garnish your wages in order to satisfy your tax amount owed. However, an IRS bank account levy is one of the most common methods of collecting on unpaid taxes.
How to Stop or Release a Bank Account Levy
When you are subject to an IRS bank account levy, the first thing you need to do is try to stop the process as quickly as possible. One effective way to do this is by contacting the IRS directly and inquiring about how to dispute the levy. You will likely need to provide documentary evidence proving that your account is being levied in error, such as documented income that was not included in your tax filings, or other supporting documentation showing why the amount due on your taxes has been significantly reduced or eliminated. If you are able to successfully dispute the bank account levy with the IRS, then you may be able to have your funds released from hold and avoid any further penalties for late payment. Ultimately, understanding how to stop an IRS bank account levy can help ensure that you are able to protect your financial interests going forward.
Bank Levy Frequently Asked Questions (FAQs)
Answers to commonly asked questions about IRS bank account levies.
Get Professional Bank Levy Help
Worried about an IRS bank levy? You can find a licensed tax professional that specifically has experience in resolving IRS bank levies here. If you act quickly, they can stop the levy before the IRS seizes your money. Get a to understand your tax options and the fees associated with utilizing a licensed tax professional with no obligation. After you find a tax professional, message them to find out the best course of action.