What is a Bank Levy?
A Bank Levy is when the IRS, or California Franchise Tax Board freezes the money in your bank or financial account. It attaches to the money in your account at that moment. The money is held, usually for 21 days, when it is released to the tax authority. Once the money is released it is very difficult to recover. And, be prepared for overdrats and a bank charge of $135.
A Bank Levy is used when a delinquent taxpayer ignores notices to pay past due taxes. Once the
IRS sends a ‘Notice of Intent to Levy and Notice of Right to Appeal’ the next move is a bank
levy, or wage garnishment. You have 30-days to file an appeal once you recieve the notice.
A Bank Levy is an extreme action to get your attention.
Releasing a bank levy can be accomplished a few different ways. One is to show 'hardship' (the form to use can be found here). Be careful if you are not familiar with the process. Maybe it is time for a FREE consultation.
Frequently Asked Questions
Will I receive a notice before the IRS issues a bank levy?
The IRS cannot Levy you until they give you a notice of appeal rights. However, once they send you this notice they are not going to contact before they levy the account.
Items that can be levied include wages, commissions, bank accounts, and personal assets.
What can I do if I get levied or a threat of levy?
- Contact the IRS and negotiate. You need to have all your income and expenses calculated prior to your call.
- File bankruptcy. There are limitations on discharging IRS debt.
- Pay them
- Ask for time
- Contact a tax settlement company
Should I handle this on my own??
That is a difficult question. Some things to consider:
- Your degree of knowledge.
- Amount you owe.
- Is there a Revenue Officer involved?
- Is it personal or business debt?
- Have you been in trouble with taxes before?
Statistics show that an offer in compromise is accepted about 30% of the time when submitted by a taxpayer. The percentage increases dramatically if done by us.
Dealing with the IRS is part art and part science. The science comes in by studying the guidelines and utilizing them to your best advantage. However, there is interpretation and room for negotiation. That is where the art comes in.
What’s the difference between a bank levy and a wage garnishment?
A bank levy is a one-time event. A bank levy will take all your money (up to the amount you owe). The money is typically held for 21 days until it is sent to the IRS.
A wage garnishment does not stop until removed, or the total amount of debt is paid. A wage garnishment leaves you an exempted amount but that can be very little.
How does the IRS find out where I bank or work?
- Your employer
- Someone paid you with a 1099
- Your bank
- You write the IRS a check
- They investigate you
- • You call them to ‘negotiate’ and they ask you lots of personal information. Anytime you contact the IRS they are going to ask you where you work, bank, live, etc.
What help is available?
Google it. Be careful. Make sure the link is from IRS.gov
The Taxpayer Advocate Service. The service is free. It can be found here. They are IRS employees but can be very helpful.
There are many blogs and articles online. Don’t be a victim of unscrupulous tax resolution company. Check their BBB rating, ask for credentials, find out how long they have been in business, and most important talk to them and ask questions. Do your homework!