bank levy occurs when the IRS decides to seize your account for getting back the money you owe them. Tax levies include seizing bank accounts, assets, and garnishing wages. It happens after you have received a tax lien. This is a claim made by the government on your property when you are late on paying your income taxes. Levy happens when the government exercises that claim.
When it comes to recouping back taxes, the prime targets are the bank accounts. First, the IRS will be contacting your bank and placing your account on hold for 21 days. During this time, you have to work things out with the IRS. Once the time frame is over, you will be facing an IRS bank levy. The government organization has the power of freezing your account and draining it for recouping the money. The levy will stay in place until you pay the IRS in full.
Fighting Off The bank levy
The IRS sends you a letter containing a warning of impending bank levies. It is very important that you don’t ignore this notification. This is your opportunity to figure out the payment options. Only using this will you be able to avoid levying your bank account by the IRS. It is best to take help from the professionals to decide the best step forward.
After you have received the letter, you can visit the local IRS office and request a hearing. Having a tax professional by your side will help you get through this better. They will be representing you during the IRS hearing and speaking on your behalf. During the hearing, you will have to present an argument on why the IRS shouldn’t levy your bank account. You will have to prove why doing this will cause a financial crisis in your life. At the hearing, you can request the judge to give an additional 30 days for working out some form pay payment arrangement. There are several options provided by the IRS for settling your account and paying off the debt.
Removing An IRS bank levy
Once the IRS has levied your bank account, removing it will be difficult. However, it is not impossible, and there are some things that you can do. One option is writing a letter to the IRS. In the letter, you will have to explain to the IRS how the levy is worsening the financial condition of your household. This letter is not just a written plea where you are asking the IRS to lift the levy on a bank account.
In the letter, you will have to provide written proof of the financial hardship you are facing. This includes not being able to pay rent or provide basic expenses for you and your family. You can ask the IRS to consider other payment arrangements. Through this, you will be able to pay off what you owe and get the levy removed from your bank account. For writing this letter, you should take the help of a tax professional. They have experience in writing such type of letter asking the IRS for removing the bank levy.
IRS is usually sympathetic to the taxpayers who are facing genuine, serious financial hardship after they levied their bank accounts. However, you must be able to prove this. This includes demonstrating that you are barely making enough money or that your income is leaving you short on covering these costs every month. If your bank account was levied by the IRS, there are some basic expenses that might be affected like rent, mortgage, utilities, groceries, and medical costs. However, there are some expenses that the IRS doesn’t consider while deciding if the levy is creating a financial hardship for you or not. This includes student loans and payments for credit cards.
Releasing A bank levy
For getting a release on your bank levy, you have several options to workout with the IRS. One option is to ask the IRS for an installment agreement. If the IRS agrees to this, you will be able to get the levy from your bank account released. Through the agreement, you can pay off the owed amount in monthly payments. The amount of monthly payments will depend on the basis of your income and liquidated assets. The IRS will make sure that the arrangement is affordable, so you don’t default on it. You will have to ensure that you don’t miss any payments. If this happens, the IRS might freeze your assets and levy your bank account again until you make the complete payment.
Another way of getting the bank levy released is by offering the IRS a lump sum payment. If you have the finances, you can ask the IRS for an Offer in Compromise. This way, you will be able to pay what you can get your account closed altogether. In most cases, IRS can settle for 80% of the total amount you owe. If the IRS accepts your Offer in Compromise, you will be able to get back your bank account. However, if you cannot even afford to pay 80% of your owed debt, you can make an offer of 70% of 60% of your debt.
Depending on your financial circumstances, the IRS might accept your offer and release the bank levy. You have to make this offer within 50 days after getting the Intent to Levy letter from the IRS. If you are unsure about how to proceed with making an offer, you can always hire a tax professional to guide you through this.
Getting the bank levy released is a difficult process. It can get even more difficult if you attempt it yourself. Rather than risking financial hardship, you should get help from tax resolutions services to avoid getting a bank levy. They know everything about the IRS code and the options that will work in your best interests for getting the bank levy released and settling your debt.