As stated in earlier blogs, the Internal Revenue Service (IRS) has several different tools for collecting a tax debt. Another tool is the Bank Levy. Here, the IRS freezes your bank account and collects whatever money is being held in that bank account. If you do not have enough money to pay your tax debt in full, the IRS will resort to another collection tool, such as garnishing your wages or earnings or attaching a lien to one or more of your properties. There is no escaping death and taxes!
Wait a minute. Actually, there are a couple or tax resolutions available to you. You can request a Bank Levy Release that will free your bank account from the IRS so that they cannot seize the money held there. First, after several letters from them, you will receive a Final Notice of Intent to Levy. If you do not respond and attempt to pay your tax debt via install agreement or payment in full, the IRS will place bank levy on your bank account(s). You have only 30 days to respond to the Final Notice of Intent to Levy before the IRS seizes the money. The IRS can levy all checking accounts and saving accounts attached to your name at any bank.
As the name implies, a Bank Levy Release frees any bank account from a bank levy imposed by the IRS. This means that the IRS can no longer seize those monies to pay your tax debt. There are several methods in obtaining a Bank Levy Release. Here is a list of them:
- Respond to the Final Notice of Intent to Levy before the 30-day response period expires.
- Pay your tax debt in full.
- Entering into an Installment Agreement (IA) or a Partial Pay Installment Agreement (PPIA).
- Request a Collection Due Process (CDP) hearing whereby you can try to persuade the IRS not to levy your bank account(s). This can be your last chance to resolve your tax controversy with the IRS before the collection process begins. Remember you only have 30 days in which to respond to the Final Notice of Intent to Levy.
There are several other circumstances whereby the IRS may not proceed with imposing a Bank Levy. Here is another list:
- Paying your tax debt in full.
- Filing for bankruptcy during the same time frame the tax debt was assessed.
- Proving that the collection was incorrectly assessed against you.
- Demonstrating that the collection was assessed after the statute of limitations had passed.
Fortunately, you are given a 22-day grace period after the expirations of the 30-day time frame to respond to the Notice. This means that your monies in your bank account are frozen or set aside instead of being taken immediately. During this 22-day grace period, you may request that the bank levy be released. You must prove or do the following:
- An amended tax return for which you have been assessed the tax debt indicates that you do not owe the tax debt.
- The bank levy was issued in error by the IRS.
- You are behind on other bills.
- Levying your bank account would cause financial hardship, making it impossible to meet your basic living needs.
- The bank levy would make it more difficult for the IRS to collect the full tax debt.
- You entered into an Installment Agreement.
- The IRS approved your request for a Currently Non-Collectible Status (CNC).
- An Offer in Compromise was approved per your request.
Keep in mind that your tax debt or assets are liable to be levied again if you do not pay off your tax debt once the bank levy is released. Once you have received a Final Notice of Intent to Levy, you must immediately consult a tax professional to avoid further complications and liability. We at Bullseye Tax Relief are ready with a variety of tax problems solutions. Just give us a call and we will assess your situation to determine if a Bank Levy Release is your best option. Come back and visit us for more information on tax problems help.