Can the IRS Freeze My Bank Account?
The IRS is very strict when it comes to taxpayers paying their taxes on time. If you are late to pay your taxes for any reason, it is important to contact the IRS as soon as possible, to avoid potential penalties or the freezing of your bank account. Repeatedly ignoring tax demands could lead to the freezing of your bank account as well.
The bank freezes the funds in your bank account based on the day and time the levy is received.
Any money deposited after that time is yours to keep; but, this does not mean if the levied funds do not pay your debt in full that the IRS will not issue a new levy and try again. They may even take it a step further and put a levy on your wages or set into motion the process to seize your home, cars, and personal property.
If you have outstanding checks of payments, your bank account will typically classify them as insufficient funds, due to the freezing of your account.
How Many Times Can the IRS Levy Your Bank Account?
The IRS can levy your bank account more than one time, which means that they may levy your funds until your pay back your debt, make an arrangement to do so, or dispute it. The good news is that the levy only attaches to the funds that are in your account when the levy is processed. You are able to deposit funds to your account without worrying that the bank will freeze those funds.
Do You Owe Any Taxes?
If you owe taxes, your bank account may be subject to an IRS bank levy. An IRS bank levy is typically issued for a one-time pull from your bank account, but the bank holds those funds for 21 days before forwarding them to the IRS. This is done in order to seize the funds in your bank account to pay off the back taxes that you owe. The reason for the 21 days is simple. The IRS hopes that you will call and make arrangements to pay in full, set up an installment agreement, or dispute the balance due as an error.
Can the IRS Take Money from Your Bank Account?
Yes, through the use of what is known as a bank levy, the IRS can essentially take funds out of your account. If you are behind or overdue on your payments, a bank levy is used to give creditors the funds that you owe.
What is a Bank Levy?
A bank levy automatically takes funds out of your bank account by freezing those funds in your account. Your bank is then required to send those funds to the creditors, in order to clear out your debt.
The creditor is of course required to provide a request to your bank that shows legal proof regarding the owed funds.
Can the IRS Take Money From My Bank Account Without Notice?
The answer depends on the situation. Typically, the IRS will send multiple notices before your account is levied. However, the IRS may levy your account without notice of your right to a hearing in a situation where the IRS plans to take a state refund, the IRS believes that the collection of tax is in jeopardy, or you were served a Disqualified Employment Tax Levy.
Can the IRS Take Money From a Joint Account?
The IRS can levy a joint bank account if one account holder has a delinquent tax debt and all other required procedures have been followed. This is true whether the joint account holder is your spouse, relative, or anyone else. It doesn't matter whose funds were placed into the account.
Can a Tax Levy be Reversed?
The IRS will return levied assets in certain circumstances. Although it is possible, requesting a return of levied assets is complex. It is highly recommended to consult with an experienced tax attorney.
Circumstances in which levied assets may be returned are:
- The levy was premature or carried out with improper notice.
- The required IRS procedures were not followed in the levy process.
- The assets that were levied hinder your ability to pay back your debt.
- You enter an agreement with the IRS to pay back your debt in installments.
How Does the IRS Find Your Bank Account?
Once the IRS makes the decision to use a bank levy, they will gain access to your bank account information and proceed with the levy. Your bank account information is either tracked via information that you have supplied or through your employer. Information that you have supplied could be found through previous tax returns, or via your social security number, which is tied to your bank account.
Need Help? Contact a Tampa Tax Levy Lawyer
The IRS takes collection activity seriously. The longer you ignore your tax obligations, the more pressure they will apply. That is where I can help. I can put our experience to work for you and make sure you never end up in a levy situation. I may even be able to help you negotiate a settlement with the IRS to pay less than the full amount of your debt.
I may be able to get the IRS to abate some or all of those dreaded penalties that may add up to more than your original tax debt. If a bank levy has caused financial hardship, I will work to get that money back from the IRS.
Do yourself a favor. Contact the Law Offices of Darrin T. Mish, P.A.to schedule a free consultation. Together, we will review your tax situation and create an action plan to protect your bank account and help you start all over tax debt and worry-free.
Suggested Further Reading:
- What Is the Fresh Start Program with the IRS?
- How Will the IRS Contact Me About My Tax Debt?
- Does the IRS Forgive Tax Debt?