Actions you can take to prevent the IRS from levying your bank account
The IRS bank account levy is one of the most powerful debt collection methods permitted by law. Imagine trying to withdraw funds from your bank account at an ATM only to discover that all of your money is gone. This can happen to taxpayers who let tax problems linger for years on end.
You should receive several IRS notices before a bank account levy happens. You will be given the opportunity to pay your delinquent tax debt, contest the debt, or work out a deal to make payments over time. But it’s up to you to actually take action and resolve your tax problems.
If you let the IRS notices pile up without doing anything about it, you may eventually have your bank account seized.
The Pre-Levy Process
Before the IRS levies the funds in your bank account, they are required to send you several notices in the mail. You should receive notices informing you that you owe the IRS money for months or even years before the actual bank account levy takes place.
The easiest way to stop a bank account levy is to respond to these notices! Either pay your tax debt or contact a tax attorney to help you figure out a solution to your tax problems.
The last notice you’ll receive is the collection due process (CDP) notice. When you receive this notice, the IRS is almost ready to levy your bank account funds. They just need to wait 30 days to see if you will request a collection due process hearing. If you receive the CDP notice, you should immediately call a tax attorney.
Stopping the Bank Account Levy
There are several ways to avoid the bank account levy, but make sure you talk to the IRS before it’s too late. Request your CDP hearing to preserve your right to defend yourself.
You can avoid a bank account levy in any of the following situations:
- Agree to a payment plan. Make monthly payments voluntarily and the IRS will leave your bank account alone.
- Submit an Offer in Compromise. If you’re eligible, you may be able to settle your tax debt for much less than you owe.
- Offer proof of financial hardship. The IRS won’t levy your funds if you can show that it will cause a financial hardship.
- Dispute the tax liability. If you don’t actually owe the tax liability, the IRS can’t levy your bank account or take any other collection actions. You can present innocent spouse defenses or argue that the IRS assessed the tax in error.
There is an additional benefit to requesting the CDP hearing—it delays the IRS from levying your bank account. They won’t levy your funds until you’ve had your CDP hearing. If you don’t agree with the tax assessment and can’t convince the IRS settlement officer at the CDP hearing, you also have the right to petition the Tax Court. This can delay the bank account levy for an even longer period of time.
Avoid bank account levies by being proactive whenever you receive an IRS notice. Consult with a tax attorney to figure out what the IRS notice means and what your options are.
Consult With a Tax Debt Attorney
The tax attorneys at Ayar Law can help you avoid a bank account levy by negotiating a settlement or disputing your IRS tax liability. To schedule your appointment, contact us today by calling (248) 262-3400.