Emergency Bank Levy Information
If are facing an IRS or state bank levy, our experienced team will create distance between you and the taxing authorities. We buy our clients much needed time, reductions, and reasonable solutions.
Bank Levies 101
A bank levy is an enforced collection, where money is taken out of your bank account. happen if you do not pay your taxes or make arrangements to settle your liability. The following are seizure actions available to both the IRS and state:
- Seizure and sale of property that you hold (such as your car, boat, or house), or
- A levy on property that is yours but is held by someone else (such as your wages, retirement accounts, dividends, bank accounts, rental income, accounts receivables, the cash value of your life insurance, or commissions).
The government usually levies only when the following three conditions have occurred:
- The government assessed the tax and sent you a Final Notice – Balance Due
- You neglected or refused to pay the tax, and
- The government sent you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy. The government usually sends this notice to your last known address by certified mail, return receipt requested, but they may give this notice to you in person, or leave it at your home or your usual place of business.
- Important Note: If the government doesn’t have your current address because you have not notified them directly of an address change, you may not get the notice. If they send a notice to an old address, it is still considered sent and they can proceed with asset seizure. (We see this happen to our clients very often, so always notify the IRS and state of address changes!)
If a levy is placed on your bank account, the levy attaches funds that have cleared and are available for withdrawal, up to the amount of the levy. The bank must wait, however, until 21 days after a levy is received before sending the money to the government. The holding period allows you time to resolve any dispute about account ownership or get professional advice on your situation. After 21 days, the bank must send the money, plus, if applicable, any interest earned on that amount.
State Bank Levies
Many states are aggressive in issuing bank levies. Perhaps the most notorious state taxing agency is the California Franchise Tax Board. You can read more about Franchise Tax Board Bank Levies and Franchise Tax Board levy laws.
Getting IRS and State Bank Levy Help
Stopping the IRS bank levy and getting the money returned to you is just step one. Step two is to make sure that the IRS doesn’t levy your bank account again. In order for this to happen, we need to negotiate on your behalf for a permanent solution to the tax problem. As such we need to:
- Verify the amount owed (if any) is what the IRS says it is. Quite often the IRS is claiming a higher amount of taxes owed than is the actual amount. This is common when tax returns have gone unfiled.
- Verify the interest and penalty calculations that the IRS has assessed. This is a common source of why tax bills are larger than expected.
- Make a formal written proposal to the IRS for resolving the outstanding tax issue. This may be anything from a currently not collectible status, to a reduced amount settlement (Offer in Compromise), or an installment agreement.
Remember: It is always preferable to prevent rather than try reversing a bank levy
IRS (CP501-504 letters) Levy Final Notice
If you have received bank levy, threat of bank levy or an IRS CP 504, it’s a very serious matter because you are about to have your assets and/or money taken by force, often over night.
What does a CP letter mean?
The CP notice is telling you that the IRS intends to enforce collections. The IRS they can seize (levy) your state tax refund, and other property or your rights to property, including:
- Wages, real estate commissions, and other income
- Bank accounts
- Business assets
- Personal assets (including your car and home)
- Social Security benefits
Below is what an IRS CP504 Final Levy Notice looks like (4-pages):