Posted by LWM Team on Thu, Jan 07, 2010
Bank robberies: you see them in action movies all of the time. Hostile criminals dressed in masks (or not) swoop in and take over banks. They command everyone to the floor and wield weapons through the air as they proceed to loot the bank of every penny they can possibly get their hands on. They frighten everyone, sometimes injure or kill folks, possibly take hostages, engage in stand-offs and much more. Occasionally, they just speed away into the sunset laughing like madmen.
This is probably how you envision an IRS bank levy as well. Perhaps you picture Uncle Sam dashing head first into the bank in his silly red, white and blue getup and taking off with all of your hard-earned money. The only differences you see are that no one tries to stop the IRS or call the police and there are no people lying on the floor or guns involved. The fact is, while it may feel as though the two are very similar, they are quite different.
With a bank levy, there are rules the IRS must adhere to. First of all, the IRS must notify you of their intent to levy no less than 30 calendar days prior to actually issuing a levy. This gives you, as a delinquent taxpayer, a rather big window of opportunity to make payment arrangements or come to some sort of agreement with the IRS in regards to the amount you owe before the levy process continues.
In the event you have sudden eye trouble and can not see your way clear of doing so, the levy will be placed on your bank account as promised. The money that is on deposit in your account the day the levy occurs will be withdrawn from your account and withheld from both you and the IRS for a mandatory 21 days. Again, you have the chance to make other arrangements. If you do, an IRS bank levy release will be issued and the money will be returned to your account. If not, bid farewell to the money you did not care enough to fight for.
Posted by LWM Team on Thu, Jan 07, 2010
Anyone who has ever bounced a check knows that the dreaded snowball effect immediately begins, whipping a series of catastrophes at you when you least need them. Soon, you are digging under seat cushions for change just so you can put gas in your car to make it to work. If your bank account is ever levied by the IRS, you may feel a similar pinch.
There are issues that affect IRS tax levy bank account safety. People who have been levied in the past often wonder if it is a good idea to put money back into the same account. Additionally, there are those who decide that, after such a harrowing experience, the space beneath their mattress is a much safer place to keep their money.
By taking the time to review and to try to understand IRS tax levy bank account protocol, you will more likely feel safe in returning to your bank following a levy. When reminiscing over an IRS tax levy bank account horror, keep these points in mind:
- When an account is levied, a one-time debit is taken from it. A levy is not a free-for-all between your bank and the IRS!
- Any money you deposit into your account after the levy is processed is yours; you will have plenty of opportunity to misappropriate it without assistance from the IRS.
- In order to snag bonus funds from your account, another levy would need to be issued by the IRS. Chances are that, after the amount of time it took them to figure out how to issue the first one, there will not likely be another any time soon. The operative phrase here is "not likely." If you are leery of having more of your money snatched up by the IRS, you should probably be more concerned about other accounts, your paycheck, and so on.
- The 21 day holding period is your chance to fight the IRS for your money and get the levy released. Do not waste a moment!
Of course, it is your decision in the long run. However, odds are your bank account is safe to use again.
Posted by LWM Team on Thu, Jan 07, 2010
IRS tax levy bank account disasters are both inconvenient and frustrating. Ramifications include, but are not limited to: bouncing checks and bank overdraft fees, along with other bank imposed service charges, as well as, of course, the anxiety over how you will be able to meet day to day expenses while there is a levy on your bank account. You may also have to deal with late fees and even service interruptions in regards to your utilities, returned check charges imposed by those you do business with, and a multitude of other similarly unfortunate inconveniences.
Fortunately, IRS tax levy bank account disasters can be abruptly headed off in some cases. Tax laws require your bank to "hold" the money taken from your account for 21 days. It is not sent off to the IRS immediately. During this three week period, you have the opportunity to get in touch with the IRS and work out an arrangement to have the levy released. Once this is accomplished, the money will be returned to your bank account.
Another thing to understand about IRS tax levy bank account guidelines is that a bank levy does not allow money to be taken from your account day after day. If your bank account is levied, the bank will deduct money only once. In order to take more money, another levy would have to be attached.
It goes a little something like this: It is Monday and you have $643.51 available in your bank account. The bank receives the IRS levy. They process it immediately, deducting $643.51 from your account and placing it on hold, as required by tax law, for 21 days. Tuesday morning you deposit $150.00 and guess what? It stays right where you put it; it is yours.
If you do not make arrangements with the IRS to have the levy released, $643.51 will be sent to them at the end of the 21 days. If you are able to appease the IRS and convince them to release the levy before the 21 days are up, the $643.51 is returned to your bank account instead of forwarded to Uncle Sam.