Bank Levy Release
What is a Bank Levy?
A bank levy gives the IRS the ability to freeze your bank account and collect whatever money you have in that bank account to pay toward your tax debt. Moreover, if you do not have enough money in your bank account to pay the full debt, the IRS can also resort to garnishing your wages and earnings. Fortunately, a Bank levy release will release your bank account so the IRS does not seize any more funds.
However, if you fail to pay your tax debt, the IRS may seize any or all of your assets. Likewise, the IRS can seize assets if you enter into a payment agreement with the IRS after receiving notice that you owe a balance to them. As a result, the IRS will send you a Final Notice of Intent to Levy if you have not attempted to pay your tax debt. They will send this notice before they place a bank levy on your bank account. Most importantly, you have only 30 days to request an appeal upon the receipt of this Final Notice of Intent to Levy.
Consequently, the IRS will execute the bank levy and collect all monies in the bank account being levied if you:
- do not appeal
- do not pay the full amount of your tax debt or
- enter into any type of installment agreement with the IRS before the 30-day period has expired
The IRS has the ability to levy any and all checking and savings accounts attached to your name.Moreover, i
What is a Bank Levy Release?
A bank levy release does as the name implies: releases the bank account from the bank levy. Therefore, monies in your bank account can no longer be seized by the IRS to pay your tax debt. There are a number of ways to obtain a bank levy release.
First, is to respond to the Final Notice of Intent to Levy before the 30-day period expires. Moreover, you can prevent the IRS from freezing your account and seizing the money in your account by:
- Paying your tax debt in full
- Opting for an installment agreement
- Requesting a Collection Due Process (CDP) hearing
What is a Collection Due Process Hearing?
A Collection Due Process Hearing could be your last chance to resolve whatever tax controversy you have with the IRS. Remember: you have only 30 days to respond to the Notice for Intent to Levy. In other words, you can request a Collection Due Process Hearing which allows you to persuade the IRS not to levy your bank account. There are several other circumstances in which the IRS may not proceed with imposing a Bank Levy:
- Paying your tax in full
- Filing for bankruptcy during the time the tax debt was assessed
- The collection was incorrectly assessed
- The collection was assessed after the statute of limitation expired
What If the 30-Day Time Frame has Expired and My Bank Account Has Already Been Frozen?
If the 30-day time frame to respond to the notice has expired, you still have a 22-day grace period in which your bank account is frozen. However, the money in your account will only be set aside rather than taken immediately. During this time, you may still be able to request your bank levy to be released. In order to have your bank levy released within the 22-day holding period, you must prove that:
- Levying your bank account would cause financial hardship and make it impossible for you to meet your basic living needs
- You opted for an installment agreement
- The bank levy would make it more difficult for the IRS to collect the full tax debt
- You are behind on other bills
- You have amended the tax return for which you had been assessed the tax debt and it now shows that you do not owe the debt
- The levy was issued due to an error on the part of the IRS
- You file and are approved for a Currently Non-Collectible status (CNC)
- You file and are approved for Offer in Compromise (OIC)
Once the bank levy is released, you still have to pay off your tax debt or your assets are liable to be levied again.
It is essential to contact a tax professional in a timely manner once you receive a Final Notice of Intent to Levy so that you can avoid further complications and liability. Just give us a call and we can assess your specific tax situation in order to find the best way to receive a Bank Levy Release. For more information, visit our page regarding our IRS tax resolution services.