WHAT YOU SHOULD KNOW ABOUT A BANK LEVY!
Like a Ninja assassin, a bank levy strikes without a peep. How and when, no one knows. One day your debit/credit card will be working fine, but the next day your card will be rejected while making purchases or while trying to draw cash from the ATM. The IRS bank Levy can be quite devastating and can make normal life impossible; turning it upside down.
A bank levy can be one of the harshest methods of collecting taxes used by the IRS. Should
you ever face a bank levy it shouldn’t come as a surprise because the IRS gives a fair warning to individuals in advance that they plan on using this method.
Bank levy – An Introduction
Bank levy is one of the easiest, quickest and the most preferred ways adopted by the IRS to levy you and get your attention fast. A bank levy is a situation wherein you have been informed that your account has been frozen and all or some portion of the money in your bank balance is taken away.
A bank levy is when the IRS literally and legally goes into your bank account and takes out a portion or all of your balance in order to make even for the unpaid taxes you owe to the IRS. When this happens, the bank has no say but to assist or accommodate the IRS. And if the bank refuses to do so, the IRS will personally hold the bank responsible for the funds that they were to receive if they were to levy your account.
Why and When Does Bank Levy Happen?
A bank levy is simply not levied just like that…impromptu. A bank levy can happen for a number of reasons, but the most common of them being, unpaid tax debt. Remember IRS does not want to levy, but has no choice. When the IRS finds out that you have not paid taxes to them, the IRS sends out series of four notices to the taxpayer (i.e., to inform you of their intentions to levy). In most of the cases, taxpayers do not respond. There are many reasons for it like the taxpayer has moved away or never got the IRS bank levy notices, or declines paying the amount due, etc. After sending out the fourth notice, the IRS sends out bank levy notices to the bank.
The Course of Action the IRS Takes for Bank Levy?
The bank levy process is actually the last straw of a long method of collection that the IRS follows. If the IRS wants to levy your bank account they must have assessed you with a tax amount to pay which you either must have not paid or entered into a payment agreement, and then were sent a final notice of intent to levy by the IRS. The IRS will literally and legally go into your bank and freeze your account(s). The balance in your account(s) will remain
frozen for 21 days until the IRS takes away the money you owe them.
Actions You Can Take to Stop or Avoid a Bank Levy
It isn’t an easy task to stop the IRS from taking away your money. If your account has already been frozen, you just can’t prevent the IRS from taking the money in your frozen account. However, you can adopt some common methods to get back into the good books of the IRS.
Installment Agreement: There are many methods of payments that have been offered by the IRS to pay off the taxes you have owed over the time. One of them being the Installment Agreement wherein you will pay the taxes owed in installments. After entering into an installment agreement, if you keep up on your promise, you will be in their good books and will not be levied, even though you may still have a large outstanding unpaid tax balance.
Offer in Compromise: Another method which the IRS rarely agrees to is Offer in Compromise. If you can show and prove that your living and financial conditions are so bad that there is no way you will ever be able to pay back the taxes you owe, the IRS will relent.
Uncollectible Status: If you prove your uncollectible status, the IRS may suspend their collection efforts and give you some time so that you can improve your financial situation enough and pay your taxes.
Appeal: You can file for an appeal within 30 days of receiving your final notice of intent to levy, before the levy has been issued by filing IRS form 12153. Filing for Collection Due Process (CDP), allows the taxpayer or their Power of Attorney to reach a final resolution with a settlement officer.
Though it it is difficult for you to deal with a IRS Levy, you do have a way out.
And that is by seeking the help of a competent tax professional before it is to late.
SOLID TAX SOLUTIONS can and will help you with your tax issues.
Call SOLID TAX SOLUTIONS at (845) 344-1040.
Bruce – Your Host at The Tax Nook
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