Answering Frequently Asked Questions About IRS Tax Levies And IRS Bank Levies

IRS Bank Levy Process with Nick Nemeth

If you owe money to the IRS, a tax levy is one of the main tax problems you could face. There are many different types of IRS tax levies, including wage levies and bank levies. A Bank levy is the IRS’s right to collect the amount owed by a taxpayer. Under the provision, the IRS freezes the funds available in the defaulter’s bank account. Even though a bank levy is one of the most extreme tactics used by the IRS to collect outstanding payments; the good news is, taxpayers have ways to avoid the situation.

To best deal with this and other IRS tax problems, knowledge is gold. The first step we suggest taking is learning everything about IRS tax levies. This will enable you to move forward with the best resolution for your IRS tax problems. In this blog, we delve into everything you need to know about IRS tax levies, focussing on IRS bank levies and how they can affect you. We provide an overview of the scenarios in which the IRS may release a bank levy, and what taxpayers need to do to find their way out of the problem.

What is an IRS tax levy?

Tax levies are one of the most undesirable IRS tax problems any taxpayer may have to deal with. What a tax levy does is seize your property or assets to pay off your tax debt. Tax levies don’t just target real estate, they can target your employer for wages and your bank accounts are also fair game. This is why understanding how to avoid and deal with a tax levy is so important.

How Is an IRS Tax Lien Different From an IRS Tax Levy?

Although some people use these two terms interchangeably, there is a major difference between IRS tax liens and IRS tax levies. An IRS tax lien is a claim against a taxpayer’s assets and will be showcased on your credit report. An IRS tax levy, on the other hand, gives them full authority to the government to seize your financial assets in order to compensate for the taxes you fail to pay to the IRS.

How Do You Know If An IRS Tax Levy Is Coming Your Way and How to Stop It?

Fortunately, getting caught off-guard by a tax levy is unlikely to happen. Before you worry about a tax levy, the IRS typically takes action through a tax lien. A tax lien allows the IRS to take claim over your property, without actually seizing it. At this stage, you can seek IRS problems help through a tax expert and get rid of the lien. This can prevent you from actually having your assets seized.

How Can An IRS Tax Levy Affect You?

A tax levy can result in the seizing of your home. This is the most extreme action the IRS can take rather than the norm, though. However, it does happen, so you should be aware of the possibility. Additionally, a tax levy can significantly reduce your salary by collecting debt directly from your paycheck. If the IRS decides to freeze your bank accounts, your finances can be affected further. This is why it is important to get the opinion of tax attorneys who are experts in levy problem resolution.
Now, let’s get back to discussing IRS bank levies.

What Are IRS Bank Levies?

When a taxpayer fails to pay their taxes on time, the IRS has the authority to issue a bank levy on their property. When and if the IRS issues a bank levy in your name, it gives them the full authority over your property, and they can seize it to pay the tax debt. The three most common types of IRS bank levies are bank account levy, wage garnishment on social security and salary, and seizure of personal property. Do your homework and act upon such issues immediately to make sure it does not affect your finances in the long haul.

What Is The Difference Between IRS Bank Levy And Tax Lien?

A bank levy is usually confused with a tax lien. It is important to understand the difference. In the case of a bank levy, the IRS has full authority to seize your financial assets to compensate for your tax debts. A tax lien secures the government’s interest in your property. Understanding the IRS bank levy process is crucial and the best way to overcome such tax-related issues. It will help you to gain adequate knowledge of bank levies and know what steps to take to resolve this issue.

How Does The IRS Inform You About Bank Levies?

Before the IRS issues a bank levy in your name, they are required to send a notice to your last listed address. It is, therefore, vital that your last known address is up-to-date. If you do not receive the notice because the IRS sent the Final Notice of Intent to Levy to the wrong address, it will not be considered by the law. Another method the IRS uses to inform you of a levy is by email. Make sure all your personal information is updated to avoid miscommunication in case of emergencies.

How Do I Release a Bank Levy?

The IRS issues a notice to the taxpayer before placing a levy on their assets. In most cases, a bank levy can be avoided by acting while there is still time and informing the IRS about your intent to pay off the debt. The best way to communicate effectively with the IRS is through an IRS tax lawyer. Hire an experienced lawyer who can help you deal with the issue.
The twenty-one-day holding period is the only opportunity you can utilize for your benefit and try to convince the IRS to release the bank levy. It is important to understand that, under normal circumstances, the IRS does not release a bank levy. There are, however, some circumstances in which the IRS may consider dropping the levy.

Scenarios In Which The IRS Can Release A Levy

The IRS releases a levy when:

  • The taxpayer has paid the owed amount, in full.
  • The collection of debt is completed before the issuance of the levy.
  • Releasing the levy can help taxpayers pay off the debt
  • Taxpayers enter into an installment agreement, which does not allow the levy to continue.
  • The levy creates an economic hardship for the taxpayer

NOTE : If any amount was sent to the IRS before the release of the levy, you can file a claim to get the money back.

Do your research and always keep yourself informed of your rights when convincing the IRS for releasing a bank levy.

How Long Does It Take To Release a Bank Levy?

The time taken for a bank levy to be released depends on the situation. Most bank levies take a day or two business days to be released. However, there are a few exceptions, such as if your case is allocated to a Revenue Officer or if the filing of past tax returns is erratic.

Wrap Up

A bank levy is a cause for concern and must be taken seriously. Overcoming and releasing IRS bank levies is a difficult task and, sometimes, impossible. Therefore, it is important for you to seek help from an IRS Tax Attorney. If you are looking for professional assistance to resolve your tax problems such as IRS tax levies and bank levies, the Law Office of Nick Nemeth can help. To schedule a free consultation with one of our IRS tax attorneys, simply call (972) 426-2991 or fill out our contact form. Let us help resolve your IRS tax debt problems.