The Internal Revenue Code authorizes the IRS to impose levies to collect delinquent tax payments. So under certain circumstances, the IRS may be able to freeze and then seize money in your bank account.
What Is An IRS Bank Levy?
An IRS bank account levy is a type of tax levy when the IRS seizes money from your bank account to cover the taxes that you owe. If the IRS sent you repeated IRS notices demanding the payments that you owe and you ignored or haven’t tried to pay or set up payment arrangements, the IRS may issue a bank levy. When this happens, the bank freezes access to your account and eventually sends the funds to the IRS.
When you have unpaid taxes, the IRS will send multiple notices, usually 2 or 3 notices. When the levy is on a bank account, the Internal Revenue Code (IRC) provides a 21-day waiting period for complying with the levy. Once you receive these notices, you will receive a grace period. During this grace period, you will receive information on how to resolve the issue with the IRS before they move on to levying your account.
The waiting period is intended to allow you time to contact the IRS, make other arrangements to be compliant with the IRS, or notify the IRS of errors in the levy, but there are cases where taxpayers end up choosing to do nothing about it, and this is when the IRS can legally seize your assets.
Receiving An IRS Final Notice of Intent to Levy
You have 30 days to come to an agreement with the IRS to settle the unpaid sum after receiving a Final Notice of Intent to Levy. Any property or right to property that belongs to the taxpayer after that time may be levied by the IRS, with few exceptions.
The IRS Takes The Funds
On the 22nd day following the levy’s issuance, the IRS will take the money. The IRS may seize all of your money if you owed them more money than was in your bank account.
The seizure of funds could lead to overdrafts or fees for insufficient funds if you have any automatic payments set up in your bank account. You will still be accountable for paying the IRS any outstanding debts.
How Do I Get A Bank Levy Released?
Unless you are eligible for a release due to hardship, a bank levy can be released only if a satisfactory resolution is made. The resolution does not necessarily mean paying the tax debt in full in one payment. The IRS offers a variety of payment options that let you pay your tax debt whichever best suits your financial condition, from paying in full over time in fixed amounts to delaying payment until you are in a better position financially.
The release of a levy does not relieve you of your obligation to pay the remaining debt. To resolve your tax liability, you must still work with the IRS; otherwise, a new levy may be imposed.
Resolve Your Tax Bills
If you’ve found yourself in a nasty mess with the IRS, take a deep breath. For taxpayers who may have difficulty paying off an excessive amount of tax debt, there’s a new and improved relief program that consolidates many major relief programs into a one-size-fits-all assistance program. Any issues regarding back taxes, unfiled years, or any other tax-related problems may be solved through one program; the IRS Fresh Start Program!
Considering that the Fresh Start Program is a federal program, you would think meeting the qualifications may be very difficult, but really, it’s a lot simpler and quicker than you think. Take the following steps in order to find out if you are eligible in as little as 3 minutes.
- Fill out some basic information about yourself and your back taxes here.
- Have a representative reach out to you to discuss your eligibility.
- Go through the enrollment process and finally reduce or eliminate your tax liabilities.