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IRS Bank Levy: Bank Account Garnishment Laws & Process

Dallas CPA Services

What Is A Bank Account Levy or Bank Levy?

A bank account levy is one of the most common forms of a Tax Levy used by the IRS to collect back taxes owed within the law. The IRS will notify your bank and will send you a notice of an intent to levy. You normally have 21 days to release the levy or stop it as your bank will hold funds for 21 days before it releases it to the IRS. The IRS will continue to seize amounts within the bank account until it has taken enough money to cover the taxes owed plus interest and penalties. However, if you act quickly, you can limit the damage and get in control of the situation.

When a Bank Levy Is Used & Requirements of IRS before Implementing

A bank levy is one of the preferred methods of levy used by the IRS because they can quickly and easily recoup large amounts of unpaid taxes with minimal effort on their part. The IRS will look at your financial situation when determining what type of levy to use. Once the 30 days have passed the IRS will most likely contact your bank to see the amount of funds in your bank account. If there are sufficient then they will immediately require the bank to freeze your account in order for them to levy. If you do not have sufficient funds in your account they most likely won't use a bank levy and will look at your employment situation and determine if they can the wage garnishment method. The IRS does have a process that it follows before levying someones bank account and the most likely won't levy an account until the follow 3 conditions have been satisfied:

  • The IRS assessed a tax amount owed and demanded payment of the taxes owed
  • After the notice was received by the taxpayer, the taxpayer failed to pay or resolve the taxes owed in another manner
  • The IRS sent a final notice of intent to levy 30 days prior to implementing a levy

Once those three conditions have been met they IRS will contact your bank and make a determination if a bank levy will be the appropriate method to seize funds in order to satisfy unpaid taxes.

Options to Handle an IRS Bank Account Levy

Depending upon your financial and tax situation you will need to take different actions to handle your IRS bank account levy. An IRS bank levy can but stopped but it is important to act quickly since you will not have much time to stop the IRS once a bank levy has been implemented.

Remove or Stop the IRS Bank Levy

There are many different methods to stop an IRS bank levy. The method you use really depends upon your financial situation. Understand the different methods that are available so you can make a determination as to what method would work best for your situation. The IRS prefers to resolve a tax problem in another manner than a levy so they are willing to work with the taxpayer, even this late in the collection process.

Appeal the Tax Levy

If for some reason you do not agree with the levy you do have the right to appeal. Even if the 30 days have passed since you received the "Final Notice of Intent to Levy and Notice of Your Right to a Hearing", you can still file for an appeal. The only difference in filing for an appeal after the 30 days are up is that you will not be able to go to court to challenge the appeal decision made by the IRS. The appeal process is very fair and is done so by a third party that is not biased in any way so you can be assured you will have a fair hearing.

IRS Bank Levy Help

When dealing with an IRS bank account levy it is highly suggested that you use a tax professional to help. Normally when resolving problems with the IRS they are willing to work with the taxpayer but the problem with resolving a bank levy is that it is very late in the IRS collection process and the IRS has already lost trust in you and has determined that you are unwilling to work with them on coming to an agreement. Once you hire a tax professional to resolve your problem on your behalf this shows the IRS that you actually are willing to resolve your tax problem and they will be more willing to come to a fair resolution, rather than enforcing the bank levy.

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Geoff Broyles CPA - Dallas CPA Tax & Accounting Services
Tax Services: Geoff Broyles CPA provides a wide range of proactive tax services for individuals, families and businesses throughout the Dallas/Ft. Worth area. We are committed to maintaining consistent communication throughout the year, allowing us to help our clients plan and make timely adjustments to any life changing events as they occur.
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Geoff Broyles CPA - Dallas CPA Tax & Accounting Services
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Geoff Broyles CPA - Dallas CPA Tax & Accounting Services
Geoff Broyles CPA - Dallas CPA Tax & Accounting Services
Personal Services: In addition to personal tax services, you get one-on-one guidance and a comprehensive financial plan that helps manage risk, improve performance, and ensure the growth and longevity of your wealth.
Geoff Broyles CPA - Dallas CPA Tax & Accounting Services
Geoff Broyles CPA
Sherman, Texas 75092
Tel: (903) 893-9977
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