What is a bank levy?
A bank levy is an administrative action taken by the Department of Revenue to collect delinquent tax. When a person has not taken steps to voluntarily resolve a tax debt, the Department of Revenue can send a notice to the person’s financial institution to attach to all money in any accounts the person has access to. The Department of Revenue will be entitled to receive up to the amount indicated on the levy notice.
The IRS sends the taxpayer a Final Notice of Levy. This is the final document received by the taxpayer, informing the taxpayer that the IRS is pursuing a bank levy. Another Notice of Levy is mailed to the taxpayer’s bank and the bank is legally obligated to attach all accounts in the name of the taxpayer, irrespective of sole or joint account status. Hence, levy freezes the cash funds on deposit in the accounts. The bank doesn’t allow anyone to access funds for 21 days from the date of receipt of the IRS Notice. However, once the 21 days expire, the bank must send the frozen cash funds to the IRS.
A bank levy is when your bank account is frozen and all or part of the monies in your bank account is seized. Bank levy’s can happen for many reasons, however the two most common are due to unpaid taxes and unpaid debt. A bank levy just doesn’t happen immediately; usually it is the result of a creditor trying to force a debtor to repay a debt. Obviously in the case of taxes, if the IRS has sent you a letter stating that you owe taxes and you either refuse to pay the debt or don’t respond to their requests by either making a repayment plan or trying to work with them towards repayment, a tool they will use is a bank levy. They will freeze your accounts and seize any money in your account up to the amount that you owe. The bank account can be almost any type of account (e.g. savings, checking, etc) and while most levy’s occur in the US, the IRS or other creditors can sometimes go after off shore accounts. Once a bank levy is made on your account, any money that is in the account will be
One of the options the IRS has to get the money you owe in taxes is a bank levy. Essentially this requires them to send a notice to your bank claiming all of the funds you have available up to the amount that you owe. The levy serves as a legal claim and seizure of the funds. This will only occur after the IRS has assessed your tax and sent you notification for payment. If you don’t pay, a notice of the intent to place a levy against your funds or other property will be sent to you as well as your right to request a hearing. You will receive these 30 days in advance of when the levy will be placed. When you receive the initial notice regarding the taxes that have been assessed, start talking to a tax expert if you know you won’t be able to pay. If you wait until they have placed a levy, it is much more difficult to change the process. If your bank charges you fees for a levy that was placed in error on your account, you may be entitled to a refund. If this happens contact the IRS and c
A bank levy is when your bank account is frozen and all or part of the monies in your bank account are seized. Bank levy’s can happen for many reasons, however the two most common are due to unpaid taxes and unpaid debt. A bank levy just doesn’t happen immediately; usually it is the result of a creditor trying to force a debtor to repay a debt.
