IRS Bank Levy

A bank levy is a legal seizure of your property to satisfy your tax debt. It is not something that has happened by surprise, although it is a surprise to find out that it has happened. A bank levy has come as a result of ignored communication from the IRS, or state taxation agency, to the delinquent taxpayer. Time is of the essence. Once the levy has been successfully completed, after a pause of 21 days from the date of the filing of the Notice with the bank, the contents of the account needed to satisfy the tax debt will be sent to the IRS or state tax agency. After it leaves the bank, it is extremely difficult to get it returned.

The IRS Levy is a hold on your money, up to the amount of the back taxes, and they can levy your bank accounts and other financial holdings up to the amount of the back taxes that are due. The Internal Revenue Code section 6331 authorizes levies to collect delinquent tax. Under the code, any property or right to property that belongs to the taxpayer, or on which there is a Federal Tax Lien, can be levied unless the code exempts the property from levy.

If you do not pay your taxes and make no effort to respond to your IRS tax bill and settle your debt, the IRS can make the determination that is the next appropriate step in the process. The IRS may have already placed a lien on any property, or interest in property, that the delinquent taxpayer may have. At this point, the IRS may levy any property you own or have an interest in. The IRS can levy real and personal property that may be held by someone else for the taxpayer. This includes wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, commissions, or the cash loan value of your life insurance policy. The IRS can also seize and sell cars, boats, houses, and other property held by the taxpayer until the tax debt is satisfied.

The IRS Bank Levy is the easiest attachment to levy. Most individuals and businesses have a bank account of some sort. Social Security Numbers and Employer Identification Numbers must be included in all applicable bank business, which is easily accessible to IRS searches by law.

The first Notice that a taxpayer receives from the IRS, or state tax agency, should be the signal that contact is necessary and resolution of a tax debt needs to take place quickly, either through installment agreement to pay, appeal, or payment.

Immediate contact with the IRS and resolution to a tax issue prevents elevation of the issue and steers the taxpayer clear of more dangerous roads that don't need to be travelled on.

The IRS usually requires that four requirements be met prior to issuing a levy:

• The IRS has assessed the tax and sent you a Notice and Demand for Payment of the assessed tax. That is the issuance of the taxpayer's tax bill.
• The taxpayer has neglected to acknowledge the Notice, has neglected to acknowledge the Demand for Payment, and has refused to pay the tax bill.
• The IRS sends the taxpayer a Final Notice of Intent to Levy and a Notice of Your Right to a Hearing at least thirty days prior to the placing of the levy. An agent may give you this Notice in person, leave it at your home or place of business, or send it to your last known address by certified or registered mail with return receipt requested.
• The IRS sends the taxpayer advance Notification of Third-Party Contact, stating that the IRS may contact third parties regarding the determination or collection of your tax liability.