What Is an IRS Bank Levy?
The IRS uses the bank levy as one of it’s tools to collect back taxes owed. It is the preferred IRS tax levy method because they can get large amounts of unpaid taxes easily. The IRS simultaneously lets the taxpayer and the taxpayer’s bank know of their intent to carry out a levy. The IRS will levy the following types of bank accounts: checking, savings, money market and certificates of deposit. The IRS wants the taxpayer to respond within 21 days. If the taxpayer does not respond, the IRS will ask the bank to release the levied funds. The IRS can follow up with more levies until they get the full tax debt amount.
The 5 Steps Leading To an IRS Bank Levy!
The IRS has 5 steps that it takes before levying a taxpayer’s bank account:
- The IRS discovers the taxpayer owes back taxes.
- The IRS then issues a series of notices demanding payment for the tax amount.
- If the taxpayer ignores the deadlines of the first series of notices, the IRS then sends a Final Notice of Intent to Levy. The taxpayer then has 30 days to respond.
- If the taxpayer ignores the Final Notice of Intent to Levy, the IRS then assesses the taxpayer’s finances. They contact the taxpayer’s bank to discover if there are funds available to satisfy all or part of the tax debt.
- The IRS issues the bank levy if enough funds are in the taxpayer’s account.
The IRS examines the taxpayer’s employment if enough funds are not in the taxpayer’s bank account. They will consider using a wage garnishment, an alternate form of tax levy.
How to Stop an IRS Bank Levy!
Once the IRS launches a bank levy, it is important to act quickly. The IRS prefers to work with the taxpayer to help resolve the tax problem. The taxpayer needs to be aware of suitable solutions. First, file any unfiled tax returns. Next consider solutions such as an installment agreement, offer in compromise or full and immediate payment of back taxes. The tax payer can also appeal the bank levy. The full title of the final notice reads “Final Notice of Intent to Levy and Notice of Your Right to a Hearing“.
We recommend working with a tax resolution specialist to solve any tax problems such as a bank levy. The IRS will view this step as a serious try by the taxpayer to resolve the tax problem. Also, an expert has the experience necessary to help the taxpayer choose the right solution for their specific tax problem.