Our Attorney for Back Taxes Can Help Fight an IRS Bank Levy
If you fall behind on your tax debt, the IRS may decide to issue an IRS bank levy. If not addressed promptly, IRS bank levies can impact various financial accounts you own, including bank accounts and retirement accounts. In some cases, the IRS may also issue a federal tax lien as an additional measure to encourage tax payment. Therefore, it is imperative to learn more about IRS bank levies, how to avoid levies, and how to release the levy on your accounts to gain better control over your assets.
Understanding Tax Levies & Liens
The IRS has the authority to seize any property you possess or have an interest in, including:
The IRS may decide that a levy is required action if someone fails to pay their taxes. An IRS bank levy is one of the most painful collection methods, as it entails the lawful taking of property to pay off a tax obligation.
- Bank accounts
- Retirement accounts
- Rental income
- Accounts receivable
The IRS may also choose to attach a federal tax lien to your assets in order to guarantee payment of outstanding taxes. Liens can be attached to all of your assets, including property, vehicles, and securities, as well as any business property you own.
Why Does an IRS Tax Levy Happen?
The IRS issues tax levies when an individual’s tax debt is unpaid and can permit legal actions to recover funds for the purpose of paying taxes, such as the legal seizure of your property (e.g., assets, financial accounts). In addition, the IRS can levy any of your personal property until the delinquent tax is fully collected.
While an IRS lien and an IRS levy can be issued at the same time, a bank levy is a much more serious collection method. A levy allows the government to seize your property, potentially leaving your bank account or other financial accounts with no remaining assets.
How Many Levies Can Be Issued?
In general, the IRS can issue several tax levies until all of your taxes are paid in full. The IRS will continue issuing levies until your tax liability is fully resolved. The IRS can issue additional levies on your bank account if the first levy did not pay off your tax debt. If you have received multiple notices on your accounts, it is advisable to consult with a tax attorney to explore your options, as certain types of property may be protected from IRS levies.
Certain types of personal property, such as clothing, furniture, and equipment below a specific value, may be exempt from levies. If you own your home, and you owe less than $5,000 on your principal balance, the IRS will not be able to seize your home. A tax attorney can help you protect exempt assets.
What Is the Process for IRS Levies?
Prior to issuing a Notice of Intent to Levy, the IRS follows several steps. It can take months for your tax situation to progress to a tax levy, which means you will have several opportunities to turn your situation around when you work with a tax professional.
First, the IRS will assess your taxes and send you a tax bill via a Notice and Demand for Payment. If you do not pay this bill, or you do not make arrangements for monthly tax payments, the IRS will then send you a Final Notice. The Final Notice of Intent to Levy will be sent with a Notice of Your Right to a Hearing, which will inform you about the levy on particular accounts or properties.
How Long Until the IRS Can Seize Funds?
You will be issued a notice about the levy on your property at least 30 days before the levy is enacted. When you receive the notice, you will have 30 days to respond. If the IRS is claiming funds from your bank accounts, then the IRS will have your bank freeze your accounts and hold funds in your accounts for 21 days before those funds are transferred to the IRS for your tax payment.
Can You Keep Any of the Money in Your Account?
When your bank receives a bank account levy, they will temporarily freeze the levied amount in your account and then transfer those funds to the IRS after the waiting period. Depending on the taxes owed and the balance in your account, your bank may not release all of your funds to the IRS.
If you owe $10,000 in taxes, and you have $12,000 in your bank account, then you will be able to keep $2,000 since that money is exempt under the Internal Revenue Code.
How Will You Receive a Bank Levy Notice of Intent?
You will receive the notice of the tax levy and the legal seizure of your property by mail most of the time. Sometimes, the Internal Revenue Service may send the Final Notice of Intent to your place of business or deliver the notice in person. If the IRS notice is sent by mail, it will usually be sent by certified mail with a return receipt to ensure you receive the notice.
How Does an IRS Bank Levy Impact Your Finances?
An IRS bank levy can significantly impact your personal finances and potentially lead to financial hardship. IRS bank levies can result in wage garnishment, seizure of other income, or collection of funds from additional personal property.
Only a few forms of income and property are exempt, such as public assistance payments, child support income, disability payments, and your primary residence (if its value exceeds the back taxes owed).
Seize Funds From Your Bank Account
IRS bank levies primarily seize funds from your bank account. A bank account levy can be placed on any bank account in your name, including a checking account or a savings account.
Seize Funds From Retirement Accounts
An IRS levy permits the government to seize other accounts, even retirement accounts like your 401k or an IRA. All the money in this financial account can be used to pay back taxes.
In addition to your retirement accounts, the IRS may seize funds from federal payments, such as your Social Security benefits. Just like when the IRS chooses to garnish wages, garnishing federal payments can have a major impact on your ability to pay for your daily needs.
Seize Your Property
Other than your bank account, the IRS can seize other property with a tax levy, such as commissions, dividends from investments, houses, cars, and boats. While IRS levies may not be issued against your primary residence, the levy can be issued on a vacation home or even property that you receive rental money from.
What Are Your Tax Debt Resolution Options?
If you have been issued an IRS bank levy, and you want to resolve your debt before the IRS levies all of your money and other personal property, you can request a collection alternative during your tax court hearing. The two most common alternatives to an IRS bank levy are an installment agreement and an Offer In Compromise.
An installment agreement allows you to send funds to the IRS to pay back taxes through monthly payments. This type of IRS payment plan can protect your wages, reduce penalties and interest, and gradually reduce the money you owe to the IRS.
Offer In Compromise
An Offer In Compromise is a potential option for reaching a settlement agreement directly with the IRS. As a taxpayer, you can use an Offer In Compromise to pay the IRS a portion of what you owe in back taxes at one time. When you send Offer In Compromise Funds to the IRS, you may be able to resolve your tax debt at one time.
Can the IRS Release a Bank Levy?
Under certain circumstances, the IRS can release a bank levy. If bank levies are causing undue financial hardship because your minimum living expenses exceed your monthly income, the IRS will release the bank levy completely. The IRS can also partially release a bank levy if the amount being levied is placing too much strain on the taxpayer by making it impossible to meet necessary living expenses.
How to stop an IRS Tax Levy
To prevent a tax levy, the taxpayer must take immediate action. There are numerous approaches to getting an IRS tax levy lifted. The first step is to contact an experienced tax attorney, like Damiens Law Firm, who can help you navigate the complex IRS system.
Ways to release a tax levy:
- Pay the debt in full
- Prove financial hardship
- Enter into a payment plan
- Submit an offer in compromise
- Apply for the Fresh Start Program
- Request a partial payment agreement
- File for bankruptcy
Contact Damiens Law Firm, PLLC today
Regardless of the affected account, it is crucial to promptly respond to an IRS levy. If the IRS has issued a bank levy because of unpaid taxes, you will likely need the help of a tax professional to avoid serious financial hardship.
Get in touch with Damiens Law Firm, PLLC at 601-957-9672 to learn more about your back tax resolution options.
What is an IRS bank levy?
IRS levies are legal actions the IRS takes to collect taxes you owe. The IRS can take your money from your paycheck, bank account, retirement account, or other assets. A levy is different from a lien. A lien is a claim on your property, like your house or car. IRS levies actually take your property. The IRS usually sends you a notice before they take your property. The notice will say how much tax you owe and what you can do to avoid the levy.
You have options to avoid or release a levy. You can pay your tax liability in full, set up an installment agreement, or request an offer in compromise. If you don’t take action, the IRS will continue to collect from you by levying your assets. So it’s important to act quickly if you receive an IRS levy notice. Otherwise, you could face some serious financial consequences.
How will a tax levy affect me?
IRS levies are one of the worst things that can happen to someone with a tax liability. A levy allows the IRS to seize your assets in order to satisfy your tax liability. This can include things like your car, your home, or your bank account. The IRS can also garnish your wages in order to collect on tax liability. Levies are not common, but they are incredibly disruptive and can cause serious financial hardship. If you are facing a tax levy, it is important to seek professional help immediately. An experienced tax debt attorney can help you negotiate with the IRS and resolve your liability without the need for a levy.
What can I do to resolve IRS bank levies?
IRS levies are one of the most powerful collection tools available to the IRS, and they can be frightening for taxpayers. IRS levies can be used to collect many different types of taxes, including income taxes, payroll taxes, and estate taxes. IRS levies can also be used to collect penalties and interest owed on delinquent taxes.
If you have received a notice of IRS bank levy, it is important to take action quickly to resolve the issue. The first step is to contact an attorney for back taxes right away to contact the IRS and try to negotiate a payment plan or another resolution. If you are unable to reach an agreement with the IRS, you may be able to appeal the levy. There are several different options for appealing an IRS levy, and an experienced lawyer for back taxes can help you choose the best option for your situation.
IRS levies can be frightening, but there are options available for resolving them. An experienced attorney for back taxes can help you understand your options and make the best choice for your situation.
How can I prevent an IRS bank levy from happening in the future?
No one wants to deal with the IRS, but IRS bank levies are especially stressful. A tax levy is when the IRS seizes your assets in order to satisfy a tax liability. The IRS can levy your bank account, your wages, your retirement account, and even your property. Needless to say, it’s important to do everything you can to avoid a tax levy.
So how can you prevent a tax levy from happening in the future? The best way to avoid a tax levy is to stay on top of your taxes. File and pay your taxes on time every year. If you can’t pay your taxes in full, set up a payment plan with the IRS. And if you owe back taxes, don’t ignore the problem. The IRS will eventually catch up with you, and the sooner you take action, the better. By taking these steps, you can help ensure that the IRS never comes after you with a tax levy.
What happens when you get a tax levy?
IRS levies are one of the harshest collections actions the IRS can take against you. A levy allows the IRS to seize your property in order to satisfy your tax liability. The IRS can levy your wages, bank account, or other assets. In most cases, the IRS will send you a notice before levying your property. However, there are some exceptions. If you do not pay your taxes or make arrangements with the IRS, they may issue a levy.
If you think you might be at risk for a levy, it’s important to act quickly. Once the IRS levies your property, it can be very difficult to get it back. Therefore, it’s important to try to resolve your tax liability before it gets to that point.
Why do I have a tax levy?
A levy gives the IRS the legal right to take your property or money to pay your tax liability. The IRS can levy your wages, bank account, retirement account, investments, or other assets. A levy is different from a lien. A lien is a claim against your property and gives the IRS the right to be repaid from the sale of your property if you don’t pay your taxes, but a levy actually seizes the property. IRS levies are very serious and can ruin your financial life. The good news is that there are ways to avoid or release a levy.