An IRS bank levy is a legal action taken to collect unpaid tax debt directly from a taxpayer’s bank account. Under this provision, the IRS freezes the available funds in the account of the taxpayer in default. Although a bank levy is one of the most aggressive collection tools the IRS uses, the good news is that taxpayers often have options to avoid or release it, especially with the right guidance. The Law Offices of Nick Nemeth, serving Dallas, Fort Worth, and Frisco, Texas, can assist you in pursuing an IRS bank levy release. In this blog, we explore the circumstances under which the IRS may release a levy and outline steps you can take to secure relief from a bank levy in Texas or beyond. Read on to better understand your rights and how to protect your financial well-being.
Scenarios in Which the IRS Can Release a Levy
The IRS may release a levy under certain conditions, including:
- The taxpayer has paid the full amount owed.
- The collection of the debt was completed before the IRS bank levy was issued.
- Releasing the IRS levy would help the taxpayer pay off the debt more effectively.
- The taxpayer enters into an approved installment agreement that prohibits further levy actions.
- The IRS wage garnishment or bank levy creates an economic hardship, making it difficult for the taxpayer to meet basic living expenses.
NOTE: If any amount has already been sent to the IRS before the levy was released, you may be eligible to file a claim and recover the funds.
How to Avoid or Respond to a Bank Levy
The IRS is required to issue a formal notice to the taxpayer before placing a levy on their assets. This notice typically comes in the form of a Final Notice of Intent to Levy, giving you a brief window to take action. During this period, taking immediate action is critical.
- The first step is to review the notice and confirm whether the tax debt in question is accurate. If you believe there’s an error, you may be able to dispute the liability by submitting documentation or requesting a Collection Due Process hearing.
- If the debt is valid, several options may help you avoid the levy. You can contact the IRS to propose a payment arrangement, such as an installment agreement or an offer in compromise. In cases of financial hardship, you might qualify for a temporary delay in collection. Timely communication and clear documentation are essential in any of these scenarios.
- If a bank levy has already been issued, you can still request a levy release by showing that the levy is causing undue hardship or that an alternative resolution is in progress. Supporting documents such as income statements, hardship affidavits, or proof of ongoing negotiations with the IRS may be required.
Handling a bank levy involves multiple steps and strict deadlines. Understanding the process and responding within the allotted time can help protect your financial assets and lead to a more manageable resolution. Our bank levy attorney in Dallas, Fort Worth and Frisco, TX, can help you negotiate with the IRS, request a levy release, or explore other forms of IRS tax lien help.
Answering 5 FAQs about the IRS Bank Levy Process
1. How Does The IRS Inform You About Bank Levies?
Before the IRS issues a bank levy, they are legally required to send a written notice to your last known address. This notice, often called the Final Notice of Intent to Levy, must be sent prior to initiating any action. That’s why it’s crucial to ensure that your current address is always updated with the IRS. If the IRS sends the notice to an outdated address and you never receive it, the IRS levy may be considered invalid under certain legal circumstances. In some cases, the IRS may also contact you by email or phone, but official notices are typically sent by mail. To avoid unwanted surprises like an IRS bank garnishment or levy, keep your contact information current and respond to IRS communications promptly.
2. How Do I Release a Bank Levy?
The IRS provides a 21-day holding period after issuing a bank levy, giving you a brief window to act. This is your best opportunity to negotiate with the IRS and attempt to have the IRS bank levy released. Under normal circumstances, the IRS does not release a levy unless specific conditions are met. These include:
- Full payment of the tax debt
- Filing an amended return that shows you do not owe the taxes
- Proof that the IRS made a processing error
- Demonstrating that the levy is causing economic hardship
In some cases, entering into a payment agreement or settlement with the IRS can also lead to the release of a levy. It’s essential to stay informed about your rights and the relief options available to you. If you’re unsure how to move forward, consult a bank levy attorney at the Law Offices of Nick Nemeth. With their experience and strategic approach, they can significantly improve your chances of resolving the issue efficiently.
3. How Long Does It Take To Release a Bank Levy?
The time it takes to release an IRS bank levy varies based on the specifics of your case. In many situations, the IRS can release a levy within one to two business days once the issue has been resolved, such as full payment, proof of error, or successful negotiation of a payment plan. However, certain cases may take longer. For example, if your case is being handled by a Revenue Officer, or if your history shows inconsistent or missing tax return filings, the process may be delayed. In more complex cases, the release of an IRS wage levy or IRS bank garnishment may require additional documentation or legal steps. Prompt communication and having our tax attorney in Dallas, Fort Worth, and Frisco, Texas, on your side can help expedite the process.
4. How Is a Tax Lien Different From a Tax Levy?
Although the terms are often confused, an IRS tax lien and an IRS tax levy are very different enforcement tools. An IRS tax lien is a legal claim the government places on a taxpayer’s assets when they fail to pay a tax debt. This lien secures the government’s interest in taxpayer’s property and may appear on their credit report, affecting their financial reputation and borrowing ability. An IRS levy, on the other hand, is an immediate enforcement action. It gives the IRS the authority to seize taxpayers’ assets, such as bank accounts, wages, or property, through actions like IRS bank levies or IRS wage garnishment to recover unpaid taxes. Understanding this distinction is important when evaluating your options for IRS tax lien help or resolving a bank levy in Texas.
5. 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 to collect the unpaid amount. An IRS bank levy allows the government to legally seize your financial assets, including funds from your bank account, to satisfy your tax debt.
Once the levy is in place, the IRS has full authority to access your property or accounts without additional notice. The most common types of levies include:
- Bank account levies
- IRS wage garnishment on salaries and Social Security
- Seizure of personal or business property
If you’re dealing with a bank levy in Texas, especially in areas like Dallas, Fort Worth, or Frisco, it’s essential to act quickly. Delaying action can severely impact your financial stability. Consulting professionals at the Law Offices of Nick Nemeth for IRS bank garnishment resolution or tax lien help can give you a clearer path forward.
Wrap Up
A bank levy is a serious matter and should never be taken lightly. Releasing or overcoming an IRS bank levy can be difficult and in some cases, nearly impossible without the right guidance. That’s why it’s essential to seek support from a skilled IRS tax attorney. If you’re facing an IRS bank levy, wage garnishment, or tax lien in Dallas, Fort Worth, and Frisco, the Law Office of Nick Nemeth is here to help. Our experienced Dallas tax attorneys and bank levy attorneys are well-versed in IRS procedures and can guide you through every step of the resolution process. To schedule a free consultation, call us at (972) 426-2944 or fill out our contact form. Let us help you find a practical and permanent solution to your IRS tax problems.
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