What is an IRS Bank Levy?
In short, an IRS bank levy is a method the agency uses to recoup back tax debts. The levy allows the IRS to gain access to your bank account and withdraw funds directly from the account (without your consent) to repay your outstanding tax balance. A levy can be particularly devastating if you need the money in your account to pay other bills or expenses. Taxpayers who don't have enough funds in their bank accounts don't usually have to worry about bank levies but they may have their wages garnished instead.
How Does an IRS Bank Levy Work?
When the IRS decides to issue a levy the agency sends you a letter of intent. After you receive this letter you have a short window of time before the IRS will send a final letter of intent. Once you receive a final letter of intent you either have to pay the tax debt or set up a payment plan within 30 days. If you do not, the agency will move forward with the levy notifying your bank. Within 21 days your bank will begin releasing your funds to the IRS.
Options for How to Release an IRS Bank Levy
While it's best to try to settle your account before a levy is issued you do have a few options to try to release the levy from your bank account. You can remove the levy or stop it by establishing a repayment arrangement with the IRS. If you feel that the IRS is in error in reporting how much you owe you can appeal the levy at any time. It's to your advantage to appeal the levy before the 30 day period after the final letter of intent ends because this gives you the option to have a court hearing. A professional tax resolution expert can help you decide which, if any, of these options are best for your specific situation.
If you are facing an IRS tax levy you can still get it removed or settle it. By learning about your options for releasing the levy from your bank account you'll be able to get back on solid financial ground.
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