Bank account garnishment can come as quite a surprise for the unassuming taxpayer who has unfiled tax returns, existing tax liabilities and/or unpaid back taxes. The Internal Revenue Service will notify the bank first to implement a levy and garnish the cash funds from your savings and checking accounts. This way, the IRS is certain that your funds are frozen before you can make any withdrawals from your bank account. If the initial bank account garnishment is not enough for your IRS tax debt to be paid in full, additional garnishments can be granted. Once a bank levy or account garnishment is in place, it is very unlikely that you will get your money back. The IRS doesn’t care about your monthly mortgage or your car payment. Their only concern is collecting the money owed to resolve your tax debt. If your bank accounts have enough money to cover the IRS debt, the freeze on your money must be terminated once the amount being garnished is collected. If you think your money may be on the line, act fast and call Dana & Fullam at (925) 626-4900 to speak directly with an enrolled agent today about your options for tax debt relief.
If you fail to respond to IRS notifications or default on an IRS installment agreement, the Internal Revenue Service may seek and enforce bank account garnishments as noted below:
- Money Judgment by Court – Once the IRS has a money judgment from the court, they can employ a tax levy and garnish your bank accounts to collect money for the repayment of your tax debt.
- Court Ordered Garnishment – If the court orders a bank garnishment of your accounts, the bank has 21 days to clear your bank accounts and forward the money to the IRS. If that does not resolve your tax liability, the IRS can seek other bank account garnishments at later dates until the tax debt is paid in full.
- Avoid Account Garnishment – You should always take the necessary steps to avoid a bank levy and the subsequent IRS garnishment of your bank accounts. Once a bank account garnishment is enacted, you lose all use of your cash accounts.
- Multiple Bank Garnishments – A court ordered bank garnishment is executed for a particular day. The bank has an obligation to clear your checking account, money market account, savings account, etc. on that given date. However, if you still have a balance due on your tax debt, the IRS can issue another bank account garnishment for future dates.
- Bankruptcy for Permanent Tax Relief – Although filing bankruptcy can provide permanent tax debt relief and stop the flow of bank account garnishments, it does not take effect until the bankruptcy has been filed. By then, the IRS may have already taken all your cash and other financial assets.
Once the IRS has a bank account garnishment in place, getting your money back is almost impossible. It is imperative to act quickly to find out from the court what can be done during the notification period after a bank account garnishment and how you may qualify for an exemption. These are private tax issues you should discuss immediately with an enrolled agent or other professional tax consultant. After the actual seizure action has been taken by the Internal Revenue Service to collect the unpaid tax debt from your bank, it is going to be difficult to recover any of the cash removed from your checking or savings accounts. Although the laws do differ in some states, monies from welfare payments, child support, VA benefits and Social Security payments are usually exempt from bank account garnishment. Remember, an IRS bank account garnishment is not necessarily a one-time event. To discuss how to prevent a bank levy against your money, contact an enrolled agent today at (925) 626-4900 or use our website’s convenient email form for a prompt response.