An IRS Bank Levy on My Account!

July 31, 2019

As we move forward through the coming months, we will concentrate a lot more heavily on federal tax debt resolution. At MC&C, we offer a wide range of legal services, but tax debt resolution is among the most common. IRS tax debt is among the most burdensome types of debt out there. In this post, we’ll discuss the basics of an IRS bank levy. Just as its moniker implies, a bank levy is an IRS seizure of the funds in your bank account.

The IRS Has Sweeping Collection Powers

Unlike other types of debt, IRS tax debt is not always dischargeable in bankruptcy. Some types of tax debt are dischargeable, under certain circumstances, but those circumstances may not always apply. What’s more, the IRS has an unusually high level of latitude in its ability to collect back tax debt. The IRS can go directly after your personal assets in order to satisfy your debt. What’s more, the IRS doesn’t need court approval to do so. This sets the IRS apart from other creditors. Other creditors typically need to receive a court judgment before they can seize your assets. But the IRS doesn’t need such a judgment. 

This type of levy is common if you don’t have sufficient value in other assets, such as real estate or automobiles. We’ll go over the procedural steps to complete prior to a bank levy. We’ll then cover how this order can be removed. Fortunately, you will ordinarily have ample warning before you have your bank account levied by the IRS. But, even with warning, you still need to be proactive and take steps necessary to resolve your tax debt situation. Toward this end, contacting a qualified tax attorney is advisable because tax debt resolution can be arcane and complicated. 

IRS Levies

If you owe IRS back taxes, the IRS can issue a “levy” to compel payment. A levy means an actual seizure or taking of your physical assets. The IRS can literally take your property, sell it, and then keep the proceeds to satisfy your debt. It has the ability to seize almost every type of property you can own. The IRS can seize real estate, automobiles, antiques, other collectibles, and physical currency.

The Essentials of IRS Bank Levies 

When the IRS issues a levy against your bank account, this is frequently referred to as a “bank levy”. The IRS freezes your bank account. That means you won’t be able to access it and freely withdraw funds. The IRS will then directly seize the funds they need to settle your balance. Once the levy is put in place, you have a time window of 21 days to resolve your debt. If your debt still remains unresolved after this time window, then the IRS will proceed with the account seizure.  

Multiple Levies are Possible

What makes bank levies particularly troublesome is that the IRS can continue to seize funds from your account in the future to settle your balance. If the IRS issues a levy and there aren’t enough funds in your account to cover the whole balance, the IRS can keep taking funds as soon as they’re made available. This makes bank levies one of the nastiest types of seizure orders.  

The Process Involved with IRS Bank Levies 

As mentioned, the IRS won’t normally just slap you with a bank levy without prior notice. In most cases, in fact, you’ll have ample notice before your bank account is attached. The IRS will first send you a written notice which lets you know that you owe a balance and that the matter needs to be resolved. With this notice, the IRS is trying to give you the opportunity to proactively resolve things so that a forcible taking won’t be necessary. Remember, when the IRS resorts to levies, this takes effort and energy on the part of the IRS. The IRS would much rather see you come forward and proactively resolve things as opposed to seizing your property. 

The Notice of Intent to Levy

If you don’t resolve your balance following this notice, you will receive another notice. This notice is the “Notice of Intent to Levy.” This is basically the IRS’ final warning that your balance must be paid otherwise the IRS will begin the seizure process. If you don’t take action within 30 days, then the IRS will likely move forward and issue a levy against your property.  

Importantly, as we mentioned earlier, the IRS doesn’t need to take you to court to issue a levy. This is a common misperception among taxpayers. Many taxpayers assume that they must go before a judge before any forcible seizures happen. But that isn’t the case with IRS tax debt. 

Contact MC&C for Resolution Today! 

If you receive a notice about an IRS bank levy pertaining to a past tax debt, you should contact a tax attorney to assist you. At Mackay, Caswell & Callahan, P.C., we help clients resolve back tax debt on a regular basis. We know the ins and outs of the tax debt resolution process extremely well. If you have back tax debt, flying solo is generally not a good recommendation. There are lots of unusual concepts and terminology which you’ll need to become acquainted with. If you contact one of our top New York City tax attorneys, we can help you select the best resolution option for your situation. Contact us today to get started on your case! 

Image credit: Pictures of Money 

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