The IRS is very stringent when it comes to getting payment in on time from taxpayers. However, there are people who find themselves unable to pay their taxes on time for one reason or another, or who simply neglect to make payment.
If you are in this type of situation and cannot pay your taxes when they are due, it is essential to contact the IRS or a tax professional to come to some agreement or solution; otherwise, you could face penalties that could make life very difficult.
Freezing Your Bank Account
If you repeatedly ignore requests and demands to make your tax payments, the IRS will take action. One of the things that the agency has the power to do is to freeze your bank account (a tax levy), and this could mean that you lose access to some or all of the funds that are in your account.
When the IRS freezes a bank account, you will no longer have access to the funds that are in the account, which means you cannot make withdrawals. If checks and payments are outstanding, these are returned as unpaid, as your bank account will be classified as having insufficient funds due to the account being frozen.
Assuming you pay your taxes or come to an agreement with regards to paying them, you can avoid these bank levies—but if you simply ignore the demands from the IRS, you are likely to find yourself facing a levy.
Can the IRS Levy Without Notice?
There is a legal process the Internal Revenue Service follows to notify delinquent taxpayers, which involves sending written notices via standard mail. Keep in mind that the IRS uses the most recent mailing address you have on file, which means you could miss out on the notices if your contact information is not up to date.
The tax agency sends two types of notices:
- Notice and Demand for Payment
- Notice of Intention to Levy
Notice and Demand for Payment
The Notice and Demand for Payment informs a delinquent taxpayer of the total amount due in back taxes. It is left in writing at your home, place of business, or mailed to the last known address on file. Everyone has 10 days to pay the amount owed in full of the Notice and Demand for Payment, or a federal tax lien gets levied.
Secondly, the IRS sends out a Notice of Intention to Levy. The Notice of Intention to Levy is a follow-up to the Notice and Demand for Payment. Think of it as the second warning for the taxpayer to pay the debt in full or reach another type of settlement. The letter is delivered to your home or business or sent to the last known address.
Notice of Intention to Levy
The taxpayer has 30 days to respond to a Notice of Intention to Levy, or the IRS can freeze your bank account. It’s vital that you take some course of action within that period to avoid losing access to your bank account. In addition to freezing your bank account, the IRS could go after your wages and assets (like vehicles or real estate).
The IRS may also immediately levy against property without issuing a Notice of Intention to Levy under certain conditions. Federal law enables the IRS to collect back taxes if the collection is “in jeopardy.” Additionally, the IRS does not need to send a written notice if they are collecting debt from a state tax refund, federal contractor, or a Disqualified Employment Tax Levy.
How to Appeal an IRS Bank Levy
The Internal Revenue Service agency has the right to recover back taxes. In the same regard, you have the right to defend yourself against the IRS. For example, you can appeal a bank levy that has frozen your account.
The Notice of Hearing memo is traditionally delivered with the Notice of Intent to Levy. It outlines your rights to defend against a tax lien or levy. Once again, acting quickly is vital, as taxpayers have just 30 days to file an appeal before the IRS can act upon your assets, including freezing your bank account.
Speaking with a qualified tax professional is very important when dealing with tax liens and levies. You need a reputable defense team to help protect your assets, including your home, business, vehicle, and bank accounts.
The IRS has the power to seize anything they can to recoup back taxes following 30 days after the Notice of Intent to Levy is delivered to the delinquent taxpayer. Therefore, the quicker you act and reach out to a tax professional, the better.
Ways the IRS Recovers Back Taxes
The IRS collects delinquent taxes from a variety of sources. The most obvious is your bank account, where you are likely to have some amount of money. Unfortunately, under a bank levy, the IRS can seize every dollar in your account, leaving you penniless.
If the Internal Revenue Service is unable to recover all the taxes owed via your bank account, it may also seize your personal property and other assets. It means that you are in danger of losing a home or business. The IRS may also go after your vehicles or other property, such as RVs and boats.
The tax agency can not only seize funds from a personal checking account, but also from your retirement accounts and cash value of life insurance policies. Additionally, the IRS may take salaries and commissions and may exercise wage garnishments to take a chunk out of each paycheck going forward.
Protect Your Bank Funds and Personal Belongings
Levy & Associates protects individual taxpayers and small businesses by offering strong tax defense services in the event of a tax lien or levy. We are ready to help you negotiate with the Internal Revenue Service and reach a solution that avoids leaving your bank accounts frozen.
If you receive an IRS Notice of Intent to Levy, you should contact us as quickly as possible. The written notice is a final warning that only grants you 30 days to act before the IRS can freeze your bank account. You have ways to defend against IRS seizures, but you need to speak with a tax professional quickly.
Contact a tax professional today by call 800-TAX-LEVY or reaching out online. Our tax consultants are available for a free initial meeting. We look forward to serving you.