Levy Bank Account – How Can The IRS Freeze My Accounts?

Levy Bank Account or frozen bank account is one of several levies that the Internal revenue Service can issue if a person is not in an agreement to pay any outstanding tax liability on record. However, before the IRS can issue such a levy, you will be informed by a notice (or a letter) stating that the IRS intends to charge a levy against your bank account. They will usually request full payment and leave it up to you to make any other arrangements. You will receive many notices from the Service, reminding you of the money that you owe them. After you get the Final Notice of Levy, and you still haven’t resolved how you will pay the taxes you owe, and 30 days expire, the IRS be able to take enforcement action to collect the tax. One such enforcement action is a levy on your bank accounts.

Levy Bank Account – How do you get a bank levy released?

It can be hard to get a bank levy released.  However, they will release a levy under the following conditions and a release of levy notice (form 668–D, Release of Levy/Release of Property from Levy) must be issued to the Bank.

1. The liability is satisfied by full payment of the remaining debt.
2. The statutory collection period has run out.
3. The release will facilitate collection of the amount that is owed.
4. The levy is creating an economic hardship, such as the levy will cause the individual to be unable to pay their necessary living expenses.
5. The taxpayer makes an installment agreement, and the IRS agrees to the release.

There must be an agreement made with the IRS  to have the levy released. The IRS will also require that all outstanding returns be filed prior to releasing a levy too.

A bank levy does not take place immediately. When the IRS first sends you a letter to remind you of the amount that you owe them, they will also request you to make the payment. If you do not make the payment, or if you disregard the letter, the IRS will continue to send you more letters. Each letter will be more threatening than the previous one. Eventually, they will send you a final notice. In this notice, they are going to inform you that if you do not make the payment to them before 30 days, then they will take enforcement action and levy bank account.

What Is The Holding Period Of A Levied or Levy Bank Account?

1.A bank must wait 21 calendar days after a levy is served before sending payment. Then, on the next business day, it must turn over the taxpayer’s money. The depositor(s) can waive this waiting period. The bank will not send money that is subject to attachment or execution under judicial process. “Bank” includes credit unions, savings and loan associations, trust companies, and others described in IRC 408(n) and Treas. Reg. §301.6332–3(b).

2.During the holding period, a levy might be released, or the amount owed could decrease. If the bank receives no release, it must send the payment after the holding period. No additional notice is required. It’s up to the taxpayer to make sure the bank receives any IRS release.

Generally, the IRS will seize U.S. bank accounts, but there are also times when the IRS may seize offshore accounts of the taxpayer. When the IRS decides to opt for bank levy, any amount of money that you may have in your account will be taken by the IRS, without any deductions. The money that they will take will be up to the amount that is on the levy. Sometimes that amount is more than you actually owe. You should make sure the IRS doesn’t take too much, and that you release the levy before the 21 days are up. This can be hard to do, Call us at 713-774-4467 and we can help.

If you want to prevent a bank levy in the first place, you need to ensure that you pay the IRS what you owe, or at least get an agreement from them not to take collection action till you are in compliance with what is necessary to do an installment agreement, offer in compromise, abatement, etc. You can read a lot about what is necessary to accomplish this under the “free advice” tab of my web site.

• If you are considering hiring us for levy bank account help, call Joe Mastriano, CPA 713-774-4467.
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