When the I.R.S. means business, they will seize your assets to settle back taxes, otherwise known as a “bank levy”. The term “bank levy” refers to a freeze on a bank account or the seizure of some or all funds in a bank account, usually due to unpaid taxes or unpaid debt. Bank levies are the result of a creditor or agency attempting to collect an unpaid debt after an extended period of time. In the case of the I.R.S., they will initiate bank levies after repeated attempts to contact and settle with taxpayers, which the taxpayers either ignore, refuse to pay or establish a settlement agreement. The danger of a bank levy is that you risk losing all of the money in your checking and savings accounts, investments, IRAs, accounts receivables, inheritances, social security, pension, insurance policies and anything else you have with equity.
If you have to not cooperated with the I.R.S. to pay your back taxes, they will enact a bank levy. More than anything else the I.R.S. can do, this will affect you the most gravely. Once you receive a letter from the I.R.S. stating Intent to Levy, you have 30 days to pay up before they take action on seizing your assets. They will contact any parties that are paying you, including your bank or employer and instruct them to start paying the government instead of you. The odds that the banks or employers will ignore these instructions are slim; otherwise they put themselves at risk. The I.R.S. will hold them personally responsible for the amount they should have collected from you.
With the installment of a bank levy, the I.R.S. can take funds owed directly from your bank account. If you lack sufficient funds, the I.R.S. can take everything you have in what is called a “Property Seizure”, such as motor vehicles or even your home.
As serious as a bank levy is, it is not irreversible and should not be ignored. The I.R.S. is open to working with you to resolve your tax issues, but you need to make the first move. In general, it makes more work for them to use a levy; the process is much simpler if it can be resolved in a different way. Everyone’s personal tax situation differs, but with professional assistance, you can arrange for a removal of your I.R.S. Bank Levy.
There are a few ways to have your bank levy removed. One is to settle your debt with the I.R.S. outright, if you have the means to do so. The other is to prove financial hardship as a result of the levy, or potential financial hardship if they continue to take money from your bank account. You also have the right to appeal a bank levy, which is recommended with the guidance of a tax professional. The last option is to remain passive and allow the I.R.S. to take what it needs from you until your debt is paid off, if you have the means to support yourself in the meantime.
To protect your money and your assets, find a tax professional to analyze your situation and help you decide the best course of action. A bank levy does not have to mean financial trouble for you.