A bank levy does not just happen overnight. However, the Internal Revenue Service may take actions to freeze your bank accounts just that quickly if you refuse to pay your tax debt or haven’t responded to their requests to work with them towards some arrangement for a tax settlement. If you think a bank levy is looming on the horizon, it is imperative that you contact an enrolled agent or other tax professional for immediate advice. Failure to do so could result in your losing the use of all the money in your bank accounts (checking, savings, money markets, etc.). The IRS doesn’t really care what you may have had the funds earmarked for; they only care about collecting the tax debt. The consequences could result in financial disaster for you and your family if you allow your back taxes and unfiled tax returns to lead to this type of punishment. Remember, the IRS will use a bank levy to seize your assets now and work out the details later.
The IRS does effectively use bank levys to collect tax debts for delinquent, non-responsive and uncooperative taxpayers who may have:
- Refused to Admit to the Debt – When a taxpayer does not communicate with the IRS about back taxes, unfiled tax returns and/or current tax debt, the government can seek a bank levy to freeze their cash accounts.
- Did Not Respond to IRS Notices – Some individuals just ignore attempts to communicate with the Internal Revenue Service about their back taxes, tax liability and the settlement of tax debt. If you are in this category, you are an ideal candidate for an IRS tax lien, wage garnishment or bank levy.
- Failed to File a Tax Debt – When a taxpayer fails to file tax returns for their back taxes, the IRS can freeze all their bank accounts (to determine total assets) while seeking a court-ordered money judgment.
- Defaulted on an Installment Agreement – If you fail to make payments per your IRS tax settlement agreement, the government can use a bank levy to force collection of the tax debt with interest and penalties.
- Made No Effort to Resolve the Debt – Individuals who show no effort to file back taxes, seek a tax settlement solution or establish an IRS installment agreement for repayment of their tax liability are prime candidates for an IRS bank levy on their cash accounts.
The best way to stop an IRS bank levy is to avoid being in this situation altogether. Typically, the IRS uses punitive measures like a tax lien, bank levy or wage garnishment when other remedies have been ignored or failed due to a violation of an existing tax settlement plan. Once the IRS has placed a levy against your bank accounts, your accounts will usually remain frozen until the tax debt is paid in full. If there was not enough money to resolve your tax liability from an initial bank levy, the IRS can request that your cash accounts be levied as many times as needed. Since you cannot make any withdrawals during an IRS bank levy, any checks written immediately prior to or during this time will bounce which will likely cause an increase in financial dilemmas. 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.