Bank Levy Release

What is a Bank Levy?

If you fail to pay your tax debt after receiving notice that you owe a balance to the IRS, the IRS has the ability to seize any or all of your assets. A bank levy gives the IRS the ability to freeze your bank account and collect whatever money you have in the bank account to pay towards 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. 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 account which you then have 30 days after receiving to request an appeal. A bank levy is typically the first step the IRS will take to collect your tax debt, if you do not attempt to pay the debt before the Notice of Intent to Levy. The IRS will freeze your bank account if you do not come to any payment arrangement with them before the 30 day period and the money in your bank account will then be put towards the payment of your tax debt. 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 makes it so that your bank account can no longer be seized. There are a number of ways to receive a bank levy release.

 

The first method you can use for a bank levy release is to respond to the notice of levy before the 30 day period ends. You can prevent the IRS from freezing your account and seizing the money in your account by:

What is a Collection Due Process Hearing?

If you receive a Notice for Intent to Levy, you are given 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 for a number of reasons, such as:

  • Paying your tax in full.
  • Filing for bankruptcy during the time the tax debt was assessed.
  • The correction was incorrectly assessed
  • The collection was assessed after the statute of limitation.

What If I’ve Passed the 30 Day Time Frame and My Bank Account Has Already Been Frozen?

If you’ve passed the 30 day time frame to respond to the notice, you 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’ve amended the tax return for which you received the debt and it 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 Notice of Bank 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. See more IRS tax resolution services.

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