Rumors are beginning to swirl that the IRS is going to resume Enforcement Collection Actions. You see, IRS Collection activity have been drastically reduced since the Coronavirus scare began. But this can’t last forever…
What does it mean if the IRS resumes enforcement collection actions? Most of these actions involve using Liens and Levies to settle tax debts.
One of the big tools in the IRS Collection’s toolbox is the IRS LEVY. The IRS can use a levy to legally seize your property in order to satisfy a tax debt. What property can the IRS seize? Wages, bank account balances, retirement accounts, vehicles, real estate and other personal property. Yes, they can take all of the above.
Today, we are going to focus on a common IRS Levy, the Bank Levy. These are typically used on checking and savings accounts held in your name.
How it begins
The IRS will provide the Bank Levy via US Mail. This notice will be sent to both you and directly to your bank. The date and time of this delivery is when the levy is considered to have been made. At that point the bank will freeze whatever funds are in your account.
The waiting period
Next, a 21 day clock begins. This period is designed to give you time to contact the IRS and figure out an alternative plan to the IRS simply taking your money. At the end of the 21 day period, if the IRS hasn’t told the bank otherwise, your bank will send your money to the IRS.
What about funds deposited after the Levy?
An important aspect to understand regarding IRS Bank Levies is that the individual levy only applies to the money in your account at the date/time the levy is delivered. Normally, the levy will not affect funds added to your account after the date of the levy. But banks have their own policies regarding their handling of IRS Bank Levies.
What do you do if you receive a bank levy?
Contact the IRS! A bank levy is one of the big ways the IRS is trying to get your attention. Usually, the IRS will use them when nothing else they have done has generated a response from you.
With the IRS ramping up collection effects it is expected that many bank levies will be issued in the coming months. Knowing how they work will help to remove some of the anxiety involved.
If you need help with IRS Tax Issues, contact me. Get a professional on your side!