When The Irs Will Use A Bank Account Levy

By Scott Grams

If you do not pay your taxes in full to the IRS they have the right to take the money. One of the ways that this is done is through a bank account levy. With this, the IRS garnishes the funds in your bank account as to collect the money that is due to them. While this is not common, the IRS is not afraid to use this method of collection if need be.

Contrary to popular belief, the IRS can take all the money in your bank account to satisfy debt. If the amount is not enough, they can continue with wage levies. On top of all this, keep in mind that the IRS will also be attempting to collect penalties and interest.

A bank account levy is the last resort for the IRS. They do not want things to get this far because it only complicates matters. That being said, some people just do not care that they owe money. Since they will not willingly pay the IRS has to take the initiative.

The IRS will do what they can to avoid issuing a bank account levy. Once you receive a Final Notice of Intent to Levy and Notice of Your Right to a Hearing you have 30 days to take action. If you don’t, the IRS will start the bank account levy process. The IRS will review your account in order to determine what type of levy would work best to collect the money due. You will not be told what form of levy is being used – the IRS will just do it. Although bank account levies are common, so are wage levies. The IRS prefers a bank account levy because it is a faster, simpler way to get the money that is due to them.

You should expect the IRS to be organized as they determine how to best collect what is owed to them. They will contact your bank to find out how much money is in your accounts. If they find enough to satisfy some or all of the debt, your account will be frozen immediately. At this point, the IRS is done contacting you. Also, you should not expect your bank to contact you should the IRS place a levy on your account. Your bank will hold the funds for 21 days, and then send them off to the IRS. During this time, you will not be able to access any of the money in your account. While some think they can work out a deal with the bank, nothing is further from the truth. The bank is required, by law, to send the money, plus interest, to the IRS.

The IRS does not want to use a bank account levy to collect money that is due to them. But if you continue to ignore notices and avoid paying your tax debt, they may not have any choice.

Now that you know when the IRS will use a bank account levy you should be able to avoid this bad situation.

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