An IRS levy on your bank account is a solution the federal government uses to get payment on tax debts. If you have not paid your federal tax bill—and the government has sent you requests for payment—they may then request the amount of money from your bank.
Once the levy is ordered and the bank agrees to it, the funds that you owe are frozen in your bank account. You cannot use them. (Other funds that you later add can be used.)
When Does the IRS Levy Your Bank Account?
The IRS can only place a levy on your bank account after:
- They have thoroughly determined your tax liability
- They sent you a demand to pay your taxes
- You failed to pay
- They sent a final notice that they would levy your bank account
- An additional 30 days has passed
Their communication with you will generally be sent to the last address they have on file for you, although they could arrange to have them delivered to you in person.
There are exceptions to the 30-day notice practice, though. The 30 days are provided so you can take action, pay your taxes due, or request a hearing. But they might skip the 30 days in certain situations, such as if they think they will not be able to collect tax from a certain individual.
What You Can Do About a Tax Levy
You may be wondering, “How often can the IRS levy my bank account?” They’ll use this solution whenever it is legally necessary—if you have not paid your taxes and not responded to requests for payment. They can activate the process above.
If you receive a notice that the IRS is going to levy your bank account, you should contact the agency immediately. It’s possible to have your money released under certain conditions:
- You request a collection due process hearing, and appeal the decision before the 30 days are done.
- The IRS finds the levy will cause you not to be able to pay your essential bills. Prove this in order to have a chance of the levy being released.
- You have paid off your taxes.
- The allowed period of time for collecting your taxes had already expired before they issued the levy.
- You are in bankruptcy proceedings.
- The release will help you pay the tax debt.
- You have set up an installment plan to pay your taxes.
- You have filed for an offer in compromise, and the IRS has agreed to accept a smaller amount than you owe.
- You can prove that your identity was stolen.
If the IRS levy on your bank account is released, it usually means you still owe your taxes and must resolve them. You may need to work with a qualified tax professional to ensure that the steps of some of these options are done correctly, such as setting up an offer in compromise.
Whatever tax problem you have, you can partner with Tax Help MD. Do you need to resolve a tax debt? Do you need help getting through a tax audit and organizing your records for an audit? Your first step should be getting tax experts on your side. Contact us today for the tax help you need.