A bank levy gives the IRS the ability to freeze your bank account and collect money you have in the bank account to pay outstanding tax debt obligations. Bank levies, like wage garnishments, do not take place before you have received multiple letters alerting you of your tax issues and the intent of the IRS to levy your bank account.

How do I qualify for a bank levy release?

If you just received your notice, respond immediately and work on having an agreement with the IRS to take care of your outstanding balances. If you disagree or you feel that there is error with your tax situation, you can request a hearing with the IRS as long as you respond within the 30 days period you are given to respond or to request a hearing. If you have received a letter for intent to levy, or if your bank account has already been levied, you can contact our office for a quick consultation so we can work with you on identifying the best strategy to handle the situation.

What is Trust Fund Penalty?

A Trust Fund in terms of employment tax should not be mistaken with a trust fund in terms of wealth management. This is the payroll tax amount assessed to the officers of the business. Tax resolution can help reduce and or arrange the payment of these taxes.

What is a Trust Fund Recovery Penalty (TRFP)?

A Trust Fund Recovery Penalty can be assessed if the unpaid trust fund taxes cannot be immediately collected from the business. This often happens if the business falls on hard times and taps into that fund for any reason. According International Revenue Code 6672(a) an individual can be held liable for penalty for willful failure to collect, account for, or pay to the IRS the taxes for the business.

Who is Held Responsible for the TRFP?

According to the IRS, the TRFP can be assessed against any person who is: responsible for collecting or paying withheld employment taxes, willfully fails to collect or pay the taxes.

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. 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. A Bank levy release will release your bank account so the IRS does not seize any more funds.

If you fail to pay your tax debt or enter into a payment agreement with the IRS after receiving notice that you owe a balance to the IRS, the IRS may seize any or all of your assets. If you have not attempted to pay your tax debt, the IRS will send you a Final Notice of Intent to Levy before they place a bank levy on your bank account. Upon the receipt of this Final Notice of Intent to Levy, you have only 30 days to request an appeal. If you do not appeal, 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, then the IRS will execute the bank levy and collect all monies in the bank account being levied. The IRS has the ability to levy any and all checking and savings accounts attached to your name.

What is a Bank Levy Release?

A bank levy release does as the name implies: releases the bank account from the bank levy. This means that the 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.

One method for releasing a bank levy is to respond to the Final Notice of Intent to Levy before the 30-day period expires. You can prevent the IRS from freezing your account and seizing the money in your account by:

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. If you receive a Notice for Intent to Levy, you have only 30 days to respond to the notice. 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:

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.
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 opt for an installment agreement.
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.

Next Steps:

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.