Emergency Bank Levy Information
If you 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 and reasonable solutions.
Bank Levies 101
The IRS and the various state departments of revenue/taxation have vast collection powers. Their most powerful weapon to collect money is a bank levy. A bank levy is an enforced collection, where money is taken out of your bank account. This can happen if you do file your taxes, do not pay your taxes or make arrangements to settle a past-due tax liability. The following are seizure actions available to both the IRS and the states:
- 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
- There has been no follow-up on the Final Notice and no full-payment, or formal written arrangement for payment, has been made.
- The government sends 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 get professional tax help involved. IF you are levied, HIRE AN EXPERT that day because each passing day diminishes the chance you will get a penny back. 21 days go fast when dealing with government bureaucracies. 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.
California aside, all states wield this power and they like to keep it once they have it. If you get levied, HIRE A TAX PROFESSIONAL THAT VERY DAY. Most tax problems are created or made worse by delay. We have yet to see a tax problem helped by delay or procrastination.
Getting IRS and State Bank Levy Help
Stopping an IRS or state bank levy and getting the money returned to you is just step one. Step two is avoiding follow-up bank levies. In order for this to happen, we need to arrange 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 an 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, the 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 overnight. Every day we come into the office at Larson Tax Relief to fresh emails and voicemails from people and businesses that have been levied in the last 12 hours.
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):