What is an IRS Bank Levy?
By Larry Weinstein, CPA | December 21, 2007
If your bank account is levied by the IRS, the bank “freezes” your bank account for the amount of the levy, on the day the bank receives the levy. The funds that are frozen are not immediately given to the IRS on that day.
You have 21 days to work with the IRS and get the levy released.
If you do not take action, your bank will send the money in your account that was “frozen” to the IRS. These funds will be credited to your account, reducing the amount owed.
To get the levy released, you must work with the IRS to find a solution such as an installment agreement, currently-not-collectible, or offer-in-compromise that would be a satisfactory solution.
The levy does not affect any deposits made after the levy, unless the IRS issues another levy.
Thus, if at all possible, it is always advisable, to deposit additional funds into your bank account after a levy. You will not have available the portion of your balance that the IRS levied upon. This will probably cause the bank to dishonor (bounce) any checks that are presented against your account.
The levy is effective for only the balance in your account at the time of levy. If your balance with the IRS is still not cleared, the IRS must issue a new bank levy to obtain more funds from your bank account.
Topics: Bank Levy |
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What is a Wage Levy/Wage Garnishment??
By Larry Weinstein, CPA | December 19, 2007
If the IRS levies or garnished your wages, the levy is served on your employer.
Your employer will be required to pay over a large portion of your paycheck to the IRS until your tax debt is settled or the levy is released.
The IRS does not take all of your paycheck; they allow you to be paid the standard deduction amount plus the personal exemption amount based upon your filing status and number of dependents.
For example, if your filing status is single with one dependent (yourself), you would be allowed to keep $8,450 for the year. This equates to $162.50 per week or $704.16 per month. The amount that you earn, above and beyond these amounts, must be paid over by your employer to the IRS.
If you don’t earn over the amount the IRS will allow you to keep, then there will be no levy.
The levy on your wages will only end (a) the levy is released by the IRS (b) your tax debts are paid off or (c) the statute of limitation prevents the collection of tax
You can appeal against the action of the IRS after the levy under the Collection Appeals Program. The IRS normally suspends collection action during the appeal. If your appeal is successful, the levy will be released.
You can negotiate the release of the levy with your local IRS revenue officer. You must provide the officer what they are requesting and establish a plan to resolve your outstanding tax liability. Mere promise to pay off your liability will not be sufficient.
IRS wage levies are one of the most onerous and intrusive actions that the IRS can take in the collection process. It is the most disruptive to your life or business and calls for quick action to get them released.
Topics: Wage Levy/Wage Garnishment |
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IRS Enforced Collection Activities-Wage Levy (Wage Garnishment) and Bank Levy and How to Stop Them
By Larry Weinstein, CPA | December 17, 2007
IRS Enforced Collection Activities-Wage Levy (Wage Garnishments) and Bank Levy
If you owe taxes to the IRS and have not responded to any of their collection letters, the final and most serious letter you will receive is the letter known as the
Final Notice of Intent to Levy (also know as Letter 1058).
If you do not file a request for a Collection Due Process Hearing within 30 days from the date of Letter 1058, the IRS can levy your bank account, wages and other assets such as retirement accounts, to collect back taxes.
When filing for a Collection Due Process Hearing, you must make another reasonable alternative to the IRS, that is less onerous than bank levy or wage levy. Examples would be an installment agreement or offer-in-compromise.
Topics: Bank Levy, Wage Levy/Wage Garnishment |
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