A bank levy is an IRS collection action in which the IRS seizes the bank accounts of taxpayers to fulfill an unpaid tax debt. It is only in cases of unpaid tax debt that taxpayers have been ignoring, avoiding, or unable to reach an agreement, that the IRS places a levy. ConsumerTaxReviews.org advises taxpayers to avoid a bank levy or take immediate help to stop it.
When Is a Bank Levy Placed?
A bank levy is placed only after the IRS has sent out many notices to taxpayers informing them of the debt amount. It is only after taxpayers have received multiple notices regarding tax debt that the IRS issues a levy. Therefore, ConsumerTaxReviews.org suggests taxpayers always respond to IRS notices regarding a tax debt and resolve the issue before the IRS begins aggressive collection actions such as a bank levy.
Before placing a levy, the IRS sends the final notice CP 90/CP 297 Final Notice – Notice of Intent To Levy and Notice Of Your Right to a Hearing to taxpayers. ConsumerTaxReviews.org informs taxpayers that this is the last chance for taxpayers to file for a debt payment program to pay off their tax debt. ConsumerTaxReviews.org warns that after the IRS has issued a levy, there is little that taxpayers can do to keep their money from being seized.
A bank levy can also be placed in cases where taxpayers default on their payment program, such as an Installment Agreement. Under this IRS payment program, taxpayers pay their tax debt in fixed monthly installments. When taxpayers do not pay the required monthly amount or stop paying it altogether, the IRS may issue a bank levy to recover the remaining tax debt. Therefore, ConsumerTaxReviews.org suggests taxpayers choose a debt payment program they are comfortable with and can afford.
Process of a Bank Levy
After sending the final notice of levy to a taxpayer, the IRS sends a letter to the bank, informing them that funds will be seized from their bank account(s) because of an unpaid tax debt. The bank is required to hold the funds for 21 days. This time period is provided to settle any ownership claims. After 21 days, the bank is required to send the funds directly to the IRS.
ConsumerTaxReviews.org wants all taxpayers to know that during the process of a bank levy, the taxpayer is not kept informed about the proceedings between the IRS and the bank.
Resolving a Bank Levy
A bank levy can be one of the most difficult tax issues to resolve. ConsumerTaxReviews.org maintains that a tax levy can be stopped under certain circumstances. Taxpayers who receive the final notice to levy can take help from tax resolution companies or tax professionals to stop a bank levy when there is still time.
Releasing a levy requires expertise in dealing with tax debt issues. Therefore, ConsumerTaxReviews.org advises taxpayers to take the help of tax resolution companies or tax professionals to successfully stop a levy. Depending on the particulars of a case, a bank levy can be stopped and a tax debt paid to the IRS. Taxpayers receive the Letter 668D (LP 68) when the IRS releases a taxpayer’s levy.
Although it is never wise to ignore tax debt, ConsumerTaxReviews.org wants to assure taxpayers that they can stop a bank levy if they take timely help. It is in the best interests of taxpayers to act to resolve their tax debt issue by choosing an IRS debt payment program.