In the event that you fail to pay your taxes or go into debt with the IRS, they can seize your finances and assets.
One of the most common ways the IRS does this is with a bank levy. A bank levy is the process by which the IRS freezes your bank account and eventually takes funds to cover the money you owe. This can be a terrifying and stressful experience, but with help from professionals, you can get a bank levy release quickly and efficiently.
If the IRS has sent you a Final Notice of Intent to Levy, you have 30 days to request an appeal or CPD hearing.
Taking one of these two actions will buy you some time to find a resolution with the IRS. If you don’t act quickly, the IRS can come after your account funds and property. Typically the first thing the IRS will do is freeze your bank account and take the funds after a short period. If you don’t have enough funds in your account to cover your debt, the IRS may come after your wages and property as well.
Bank Levy Release
If you fail to reach an arrangement within the 30 days of notice from the IRS, the bank levy will take effect. The funds in your account will be frozen and set aside by the bank for 21 days.
On the 22nd day, the bank sends the frozen funds to the IRS. It’s extremely important that you take action in this 21-day period and seek out a bank levy release. You can resolve this by contacting a tax professional or the IRS directly. Getting a bank levy release is difficult but not impossible. Once the 21 day period is over and the IRS has confiscated your funds, it is incredibly difficult to get them back. Don’t wait until the last day to seek out a bank levy release with the help of a tax professional– the process can take a few days. This kind of levy will not affect other deposits into your account. Unless your wages are being garnished by the IRS as well, your check and cash deposits will remain untouched by the IRS.
How to Stop an IRS Levy
There are a few ways you can prevent and stop an IRS levy. Depending on your financial situation and particular case with the IRS, you may be able to use one of these methods to find a solution to your IRS tax levy.
Request a CDP Hearing
CDP stands for a Collection Due Process hearing. Once you have received your final notice, you have 30 days to request one of these hearings. Once you have made the request, you’ll be provided with time to work with a tax professional to find a resolution with the IRS. If you can avoid an IRS levy release, it’s always best to do so by requesting a CDP before the IRS freezes your accounts. You may appeal if you are in the midst of a bankruptcy proceeding—you can find out if you qualify by speaking with a tax professional.
Pay in Full
Paying in full is your best option for tax debt relief but this isn’t always possible. If you can pay in full, it can prevent the IRS from charging interest and any further penalties. This can be a great way to avoid having to get a release of levy from the IRS after your 30 days are up.
Enter an Installment Agreement
One form of IRS bank levy release is an installment plan. After your account is frozen, if you agree to a payment plan to resolve your debt with the IRS, you can get an IRS levy release. However, if the IRS thinks it can get more money a different way, they may reject this option. It’s always best to consult a tax professional as this arrangement can be difficult to reach with the IRS.
Prove Financial Hardship
Once the IRS has told your bank to freeze your accounts, you may not be handle your other bills or hold the money you need to meet basic living standards. One way to get an IRS levy release is to prove that you cannot live on the remaining funds in your account. Meeting with a professional tax representative is the best way to put a case together to prove financial hardship. You will have to provide the IRS with a detailed report of financial information. If you’re successful, your account will be labeled as CNC or uncollectible. This won’t be a permanent fix—the IRS will review your case every two years and decide if you are in a position to pay back the money you owe.
The IRS can also garnish your wages to pay back the money you owe. A bank levy release might not be the only kind of IRS levy release you are going to need. If the IRS implements wage garnishment, your entire paycheck won’t be deposited into your bank account— a portion of your income will be sent directly to the IRS from your employer.
An IRS tax levy release doesn’t have to be the end. Community Tax can assist you in resolving your tax levy issues with the IRS. Our professionals are here to walk you through every step of your IRS levy release letter and every other part of the release process. Don’t let the IRS create further financial hardship for you and your family, give Community Tax a call as soon as you receive a notice of levy from the IRS. IRS levy help is just a call or click away, contact Community Tax today.