Posted by LWM Team on Wed, Apr 28, 2010
When your property is confiscated to fulfill a tax debt you owe, the action is called a levy. The seizure of property for that reason is a lawful action. A levy of this nature is not a lien. A claim for the purpose of providing security for a tax debt is a lien. It is a levy that is responsible for taking the property to pay the tax debt. Uncle Sam has the power to take your property and sell any kind of personal or real property you own or have a stake in, if you refrain from settling tax debt or contacting the IRS to make other arrangements to pay. The IRS may:
- Confiscate and sell assets such as your house, car and/or boat
- Levy property held by another person but owned by you e.g. cash loan value of your life insurance, commissions, wages, rental income, retirement accounts, bank accounts, accounts receivable and licenses.
The IRS can levy if three requirements exist:
- A Notice and Demand for Payment is sent and your tax is evaluated
- You did not pay tax or declined to pay tax
- You were sent a Final Notice of Intent to Levy and Notice of Your Right to a Hearing also called a Levy Notice. This must take place thirty days prior to the levy. You may also be handed the notice personally, notice may be left at your place of business or home, or it may be sent registered or certified to your latest known address. A replacement receipt is necessary.
An IRS official may assess your situation or a Collection Due Process hearing in conjunction with the Office of Appeals at your request. A Collection Due Process hearing is filed with the IRS that is given on your notification. The following may be conversed:
- You paid up prior to the sending of the levy notice
- The IRS reviewed the tax and sent the levy of notice during bankruptcy
- The IRS erred in the procedure of their assessment
- The Statute of Limitations terminated prior to the sending of the levy notice
- No chance for you to argue the evaluated liability
- You want to talk about collection choices or
- You want to present a spousal defense
At the end of a hearing the Office of Appeals delivers a resolution.
Posted by LWM Team on Thu, Jan 07, 2010
When the government seizes money from a taxpayer's bank account, it is called a bank levy. For obvious reasons this is one fiasco that should be avoided at all costs. Failure to comply with IRS obligations and demands will ultimately land you smack dab in the midst of a bank levy process. Out of consideration for the delinquent taxpayer, a 30 day notice is issued before this action takes place. Taxpayers then have a chance to pay up or to somehow resolve their tax issues before the actual levy is handed down by the long arm of Uncle Sam.
When the IRS attempts to wipe your account dry of any remaining funds, your bank, in accordance with tax laws, delays the process. The bank places a hold on the money in question rather than simply forking it over to the IRS. There is a 21 day grace period that allows room for you, the taxpayer, to contact the IRS. This grace period is best utilized for negotiations and the making of beneficial deals with those kind folks that work for the IRS.
If you are stubborn and still refuse to see the need for coming to a mutual meeting of the minds with the IRS in regards to the payment of your tax debt, then there is no help left available to you at this time. You will learn first hand what it is like to watch your bank account be pilfered, legally, by good old Uncle Sam. At the end of 21 days, the money in your account will be rushed off in the most expeditious of ways to the government and appropriately applied to your past due balance.
It is not a secret that the IRS uses a steel fist in obtaining what is owed to them. A bank levy is just one example of the many punishments inflicted on taxpayers who have neglected their debt.
Posted by LWM Team on Thu, Jan 07, 2010
The idea of a bank levy being imposed rather forcefully by the IRS on your already chaotic lifestyle may not seem like something you want to deal with. If you think it sounds like an interesting way to pass the time, you really need to get out more often (or consider staying in and having yourself admitted). The fact is, you are given a couple of chances during the bank levy process to stop the levy from ever happening. You simply have to take the necessary steps to stop that bank levy in its tracks.
First of all, before the IRS can place a levy on your bank account, they must provide you with notice of their intent to issue a bank levy. The notice must be given a full 30 calendar days from the proposed time of issuance. When you get this notice in your hot little hands, you have a chance to contact the IRS and work out an agreement on the amount owed and how it is going to be paid. It is often possible to make an installment payment arrangement with the IRS that will continue until the balance owed is paid off.
If you fail for whatever reason (maybe the dog ate your notice) to make acceptable arrangements with the IRS to pay your past due taxes, the bank levy will take effect just as Uncle Sam warned you it would. Once the bank receives notification of the levy, it will withdraw the amount that is currently in your account and place it on hold for 21 days. During this time you will not be able to touch the money, but it will not be sent to the IRS either.
If you really want to stop the bank levy, this is your last chance to do so. You must contact the friendly folks at the IRS who are anxiously awaiting your call as if you were some kind of celebrity and make those darned payment arrangements. This is your final chance! If you do not make the required arrangements, you can kiss the money on hold at your bank goodbye. Your bank account will be levied, but, on the bright side, your IRS debt will be decreased.
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
The best way to feel bank levy relief is, of course, to prevent it from happening in the first place. However, if you foresee yourself having one imposed on you, there are a few simple measures you can take to stop it in its tracks.
From the date you are issued with the bank levy, you have 21 days to get yourself bank levy relief in some way or another. After this time limit, the IRS will take the money from your account (or accounts) and you may be left with nothing or very little. Even if it's a joint account, the IRS can still take money from it. What matters is that it's in your name too.
The best way to get bank levy relief is to pay off your debt in full. This is especially effective before the levy is issued (in other words, when you're worrying you're going to be issued one), since you will likely have to pay less if you cough up beforehand than if you pay during the window period when the levy has been issued but not enforced.
If you don't manage this, there are other strategies you can try. You may qualify for tax relief, exempting you from paying certain taxes, or you may be allowed to pay less than what you debt is, with the IRS simply just forgiving and forgetting your debt. You may also be allowed to arrange payments in a way that will make it easier for you to pay. To find out about these options, your best bet is to discuss it with a tax professional, who will be able to give you advice and guide you to which option may be most suitable for you.
Posted by LWM Team on Thu, Jan 07, 2010
If trouble paying taxes has been a problem for you before, you may have been issued a bank levy by the IRS. This simply means that the IRS has taken money out of your account in order to pay off the tax debt you owe them. In order to avoid action being taken again you by the IRS and, therefore, to get bank levy relief, you need to ensure you are paying your taxes exactly as you should right now. If you owe the IRS money from the past, they will not negotiate if you are not currently paying your taxes properly.
A good idea for those who are self-employed/run their own business and want bank levy relief is to create a bank account solely for taxes. You should even name the account "tax account" or something similar to make it perfectly clear what its purpose is. For every payment you receive from clients, take a specific percentage off of it (10-20%) and deposit that percentage into the tax account. This will ensure the account has enough money to cover you. You will then pay the IRS the money you owe them four times a year, from this account each time (The 15th of April, June, September and January).
Doing this will earn you goodwill points with the IRS because not only will they see you as someone who is more like an employee than a businessperson, but they also will see you as someone who puts effort into their taxes and has no intention of dodging any. Just make sure you prioritize your payments into your tax account and don't skip paying it due to other bills (such as credit cards).
Posted by LWM Team on Thu, Jan 07, 2010
Tax levies can be nasty. If a levy is placed on your employment earnings or on your bank account, you may be unable to pay your monthly expenses and support your family or to continue to run your business. In addition, your bank account can be seized, as well as assets like your boat or cottage, which will be sold off to pay your tax debt. While these may be effective means for the IRS to collect what they believe is owed, levies can cause considerable hardship for you. You can, however, negotiate a tax levy release in some cases.
The easiest and fastest way to secure a tax levy release and to get the taxman off your back is to both pay off what you owe in full and file all of your outstanding tax returns, if applicable, or to negotiate monthly payments or some other form of regular instalment payments with the IRS. You can explore options such as borrowing from friends and relatives, or borrowing against your assets, to pay off your debts. If this is not an option for you, you will have to be prepared to prove that the levy causes undue financial hardship for you and in fact decreases your ability to pay what you owe or that an error has been made on your file to secure a tax levy release.
Other options that may be available to you include filing for Currently Non Collectible Status or an Offer in Compromise. While you can apply for these on your own, it may also be a good idea to consult with a tax lawyer for assistance. The great advantage of having a tax lawyer on your case to secure a tax levy release is that they can negotiate with the IRS on your behalf and you will no longer receive collection calls or letters. Many tax lawyers will also only charge you if your case is successful. Your chances of success are also greater with a professional on your side.
Posted by LWM Team on Thu, Jan 07, 2010
Being subject to a tax levy can be a devastating experience personally, financially and professionally. Fortunately, you can also negotiate a tax levy release in most cases. A levy can take the form of a wage garnishment, freezing and seizure of your bank account, or a seizure of your property and, if enacted, the levy will be in place until such time as your tax obligation is paid in full. You will have received a letter from the IRS thirty days before such enactment, warning you of the intent to levy and notifying you of your right to a hearing. In the case of a levy on your bank account, the funds in your bank account will be frozen for 21 days in an attempt to force you to pay your taxes. If you do not pay in this 21 day period, your bank account can be seized to pay off what you owe. If your property is seized, it can be sold off to pay your debts.
It is of course easiest to secure a tax levy release before a levy is put into place. In order to do this, you will have to either pay off your debt in full, enter into an agreement to make regular payments, or appear at a hearing to discuss your case. If you choose the latter, you will have to be prepared to prove that a levy would cause undue financial hardship for you and propose a manner to pay off your unpaid taxes in order to secure a tax levy release.
If a tax levy is already in place, the situation is a little more complicated. You will need in this instance to fill out a myriad of forms to secure a tax levy release and again either prove your case for financial hardship, or propose a method to pay off your taxes in full. If you are not able to pay off the amount that is owed, you can apply for Currently Non Collectible Status, which will ease your tax burden temporarily, or to draw up an Offer in Compromise, where you will pay back only a portion of what you owe.
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
As much as the IRS hates to admit it, they make mistakes too. Similarly, as much as we hate to acknowledge it, most IRS agents can pass for human...as long as it is not tax season. With this in mind, it should not surprise you that people may be "accidentally" unjustly levied by the IRS.
If this happens to you, there are options. You can ask to have your case reviewed, request a Collection Due Process Hearing with the Office of Appeals (within 30 days of the date of your levy notification) and you may be able to get an IRS Bank Levy Release. This generally holds true if any of the following circumstances apply to your case.
- The levy notice was sent by the IRS after you paid what was owed. (What wonderful record keeping system have they "upgraded" to now?)
- The IRS assessed tax and sent the levy notice during your bankruptcy, which was when you were subject to an automatic stay of your taxes. ("You filed bankruptcy? When? Prove it!")
- The IRS made an error (gasp!) in procedure during the assessment of your tax liability. (Please refer to the first paragraph above.)
- The statute of limitations was up before the levy notice was sent. (Do they let that sort of thing occur?)
- You did not get a chance to dispute the assessed liability. (Like they would have listened to your dispute anyway!)
- You wished to discuss collection options. (They put you on hold for how long? And disconnected you?)
- You need to make a spousal defense. (Duh! Did you not know that if you make them laugh with stories about your spouse you also get a discount and an extension?)
On the serious side though, when the decision has been made regarding your IRS Bank Levy Release, they will inform you. Should you not agree with their determination, you will be awarded a parting gift of 30 days to bring a suit to contest their decision. This only happens if they (have the audacity to) deny you an IRS Bank Levy Release.