Financial Resource

A bank levy is a nasty tool the Internal Revenue Service has at their disposal to use against taxpayers they believe owe them money.

The Internal Revenue Service issues a levy notice to the person’s bank.  This levy notice requires the bank to freeze the party’s assets for twenty-one days.  If, for any reason, the bank was to refuse or ignore the IRS levy against your account, it would then become liable for the money, itself.  During these twenty-one days, the taxpayer or their representative can negotiate with the IRS for release of the levy.  If no compromise is reached, after twenty-one days the money in the accounts remits to the IRS.

Any monies deposited after the levy remits are the property of the account holder.  If the Internal Revenue Service wants this additional money, they have to file another levy in order to get it.

Because a bank levy is generally a one-time event, the IRS will not release a bank levy unless payment in full is satisfied or the taxpayer can prove “extreme financial hardship”.  You have extreme financial hardship if the funds in the bank are necessary to the taxpayer for their health and welfare, or generation of income.  Some of these hardships might be upcoming medical expenses, utility shutoff notice, foreclosure, repossession, business payroll, or eviction.  If the IRS does agree to a release because of one of these hardships, they generally allow only the release of enough funds to cover the expense.

You can also get a levy released through an Offer in Compromise.  However, such a release can only take place after the Internal Revenue Service has determined that the Offer in Compromise meets all procedural requirements.  You can never be certain how long this will take, if it happens at all.

If you find your income or your bank accounts under an IRS levy, you will want to contact a tax attorney or tax resolution specialist immediately.  There is no sense in you attempting to negotiate out of an IRS bank levy.  Strictly based upon the fact that they issued this levy against you, the Internal Revenue Service has flagged you as an uncooperative taxpayer.  

It is now best to hire a professional to represent your interests in a detached business manner.  Tax resolution teams are usually made up of former Internal Revenue Service Agents, CPAs, and tax attorneys.  In this situation it is going to take the work of these professionals if you have any hope of releasing the Internal Revenue Service’s Tax Levy against you.

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