How to Beat an IRS Levy

Can you beat a bank levy? Yes!

But it’s better to avoid getting bank levy. First, a primer on bank levies.

A bank levy is an enforced collection, where money is taken out of your bank account. Before the IRS or state can levy your bank account they must send a Notice of Intent to Levy to your last known address.

If you do not pay your taxes (or make arrangements to settle your liability):

• The government can seize and sell property that you hold
  (such as your car, boat, or house), or
• The government can levy 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.

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 until 21 days after a levy is received before sending the money.  The holding period allows you time to resolve any dispute about account ownership, or yet professional advice on your situation.  After 21 days, the bank must send the money, plus, if applicable, any interest earned on that amount.

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IRS Notice of Intent to Levy – CP 90 and CP 297

What a CP 90 looks like:

We previously asked you to pay the federal tax shown on the next page, but we haven’t received your payment. This letter is your notice of our intent to levy under Internal Revenue Code (IRC) Section 6331 and your right to appeal under IRC Section 6330.

We may also file a Notice of Federal Tax Lien at any time to protect the government’s interest. A lien is a public notice to your creditors that the government has a right to your current assets, including any assets you acquire after we file the lien.

If you don’t pay the amount you owe, make alternative arrangements to pay, or request an appeals hearing within 30 days from the date of this letter, we may take your property, or rights to the property. Property includes real estate, automobiles, business assets, bank accounts, wages, commissions, social security benefits, and other income. We’ve enclosed Publication 594, which has more information about our collection process; Publication 1660, which explains your appeal rights; and Form 12153, which you can use to request a Collection Due Process hearing with our Appeals Office.

Like other enforced collection actions, like garnishments, a bank levy can reoccur until the corresponding liability is fully paid, along with any extra costs such as penalties and interest. If a threat of a bank levy is causing you trouble, or you believe that you cannot pay your liability in full, a professional tax service can help you decide the best move to make next.

To prevent collection action, please send your full payment today.

* Make your check or money order payable to United States Treasury.
* Write your Social Security Number on your payment.
* Send your payment and the attached payment stub to us in the enclosed envelope. The amount you owe is shown on the next page.

If you have recently paid this tax or you can’t pay it, call us immediately at the above telephone number and let us know.

The assessed balance may include tax, penalties, and interest you still owe. It also includes any credits and payments we’ve received since we sent our last notice to you. Penalty and interest charges continue to accrue until you pay the total amount in full. We detail these charges, known as Statutory Additions, on the following pages.

Enclosures:

Copy of this notice

Pub 594, IRS Collection Process

Pub 1660, Collection Appeal Rights

Form 12153, Request for a Collection Due Process Hearing

Envelope