In order to enforce a tax debt, the IRS may legally seize your property; this is known as a levy, and it is a common strategy used by tax authorities to recover unpaid taxes.
One of the most popular types of levies imposed on individuals by the IRS is called a bank levy, and this occurs when the IRS places a hold on, or freezes your bank account. A bank levy empowers the IRS to legally seize the funds in your bank account in order to resolve any monies you owe in taxes.
You will receive a Notice and Demand for Payment from the IRS before a bank levy is put in place. This document serves the purpose of notifying you about the amounts you owe in federal back taxes, including information about any interests and penalties that you may have incurred as a result of your debt. If you fail to pay the taxes, interests, and penalties enumerated in the letter, the IRS will then proceed to give you a 30-day levy notice, also known as a Final Notice of Intent to Levy and Notice of Your Right to a Hearing. The IRS may give this letter to you personally, send it to your home, business, or last-known address via certified mail.
The IRS will give you a final opportunity to settle your back taxes during the 30-day notice period. If you do not respond to the notice by taking actions towards the resolution of your unpaid back taxes, then the IRS may issue a bank levy against you.
Once a bank levy is in place, and a hold has been placed over your account, you have a window of 21 days before the bank is legally required to turn over the funds in your account to the IRS. If the total amount of funds in your account do not equal the amount that you owe in back taxes, the IRS will continue to place levies on your account until the full amount is recovered.
How can we help you stop an IRS bank levy?
There are several options available to you when it comes to dealing with the IRS and impending bank levies, many of which may be unknown to a non-professional. They include:
Collection Due Process Hearings:
You have the right to request a Collection Due Process Hearing before the bank levy process is initiated. You can do so during the 30-day long notice given to you by the IRS.
The purpose of this hearing is to persuade the IRS against issuing a bank levy on your account. You must also have a valid reason for this request.
If, for example, you have paid the amount of taxes in full, or if the taxes were assessed while you were in bankruptcy proceedings, you may have solid reason to request a Collection Due Process Hearing. A procedural error made during tax assessment, and a missed collect statute expiration date are also good reasons to request for a Collection Due Process Hearing.
Paying the amount of taxes in full:
During the 30-day notice period and the 21- day window, you are allowed to make attempts to resolve the amount you owe in taxes to the IRS. If you are able to pay up the amount you owe in back taxes (including any interests and penalties accrued), the IRS will stop the process of placing a bank levy on your account.
Another great way we can help you avoid having a bank levy placed on your account is by getting you on a repayment plan agreement with the IRS. A repayment plan allows you make monthly payments over time until you have completely resolved the amount you owe in back taxes to the IRS.
Declare Financial hardship:
If you are in a bad place financially, we can help you get your back taxes declared uncollectible by declaring financial hardship. This forces the IRS to reconsider their judgment by proving that it would be unfair for the IRS to go ahead with the bank levy due to your financial situation.
Offer in Compromise:
We can help you avoid an IRS bank levy by entering into an offer in compromise with the IRS. This reduces the overall amount you owe in taxes and allows you resolve your tax debt issues for a fraction of the original figure owed.
We offer the best tax relief solutions tailored to meet your specific needs. Call us now for a free consultation.