When you owe the IRS money in back taxes, you are expected to pay it back either in one lump sum or by setting up a payment plan. Failure to pay the taxes – or to follow through with the agreed-upon payment arrangement – can cause the IRS to take action.
One type of penalty they might assess against you is a bank levy. Learn more about what a bank levy is and how it can impact your finances.
Key Insights We Will Discuss:
- Facts about bank levies
- How a bank levy can impact you and your finances
Facts About Bank Levies
If you fail to pay back taxes to the IRS, it may place a hold on- or freeze – your bank account through a bank levy. The federal agency does this to seize the funds to pay off your tax debt.
When you owe the IRS back taxes, the agency will typically send you a Notice and Demand for Payment to notify you of your debt amount. This total will also include interest and penalties that the federal agency has assessed. If you do not pay the back taxes and additional assessments, the IRS can then send you a levy notice.
The IRS typically informs taxpayers of bank levies via mail. It will start with a 30-day levy notice, called a “Final Notice of Intent to Levy and Notice of Your Right to a Hearing.” This notice may be sent to your home or your business. You can resolve your tax debt during these 30 days to avoid a levy. If you do not, a bank levy may be assessed.
How a Bank Levy Can Impact Your Finances
According to the IRS, once a levy is places on your bank account, you are given a 21-day waiting period to comply with the levy before it extracts the funds from your account. If the total amount owed is not available in your bank account, the IRS will continue to place levies on your account to take additional money as it becomes available . This will continue until the entire tax debt is paid off.
Contact an Attorney
If you are facing a bank levy, call Ayar Law at 800.571.7175 to receive free, no-obligation tax advice from a qualified and experienced tax attorney. Our attorneys can help review your options and help you avoid the bank levy.
- Failure to pay back taxes can result in the IRS placing a levy on your bank account.
- A levy may be in place until your entire tax debt has been repaid to the federal agency.
- Contact Ayar Law to get free, no-obligation legal advice at 800.571.7175