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An IRS Bank Levy is
often more painful than an IRS Wage Levy.
Any bank account that is tied to a
taxpayer's Social Security Number can be levied by IRS to
collect the unpaid tax that is owed by that taxpayer.
If the bank account is not owned by
the taxpayer, but the taxpayer is a signor on the account and
the taxpayer's Social Security Number is tied to that account, then
that account can still be levied by IRS to collect the
taxpayer's unpaid taxes. The account can be owned by anyone:
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Spouse
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Former spouse
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Child
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Family member
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Boyfriend or
girlfriend
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Business partner
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Business of any
kind
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Trust or estate
If a taxpayer has a
large sum of money in a bank account when it is levied by IRS,
chances are extremely slim that IRS will give any of it back to
that person.
IRS policy is to refuse to release a bank levy under almost all
circumstances. Does IRS always refuse to return any or all of
the funds that have been levied? No, but such cases are very
unusual. Once
the money in the account has been sent to IRS, it is virtually
impossible to get IRS to refund that money to the taxpayer.
Will
IRS give any or all of the levied funds back to the taxpayer or
other owner of the account? Yes, but IRS will always determine
if they should release any of the money and they will also determine
how much will be released, if any.
Bank Levy FAQs
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Can IRS take
all the money in a bank account? The levy document that
is received by the bank will tell the bank the maximum
amount to levy. The bank is then required to hold all the
funds in all accounts at their bank up to that amount.
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Will the bank
keep taking my money from future deposits? No. An IRS
Bank Levy is a one-time event. It affects only the money
that is in the account on the day that the bank receives the
levy.
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Can I make
future deposits to that account that will not be held by the
bank? Yes. All future deposits will be available to the
account holder. If the bank receives the levy notice on
Monday and there is $150 in the account, then IRS will "lock
down" that $150; then, if a deposit is made on Tuesday or
any following day, all those deposits will be available to
the taxpayer and will not be "locked down."
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What happens
to the money that is levied? The bank is required to
hold the money for 21 days to give the taxpayer a chance to
get IRS to release the levy and tell the bank to put it back
into the taxpayer's account.
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What happens
if I do nothing? You will lose the levied money and the
bank will send it to IRS after that 21 days expires.
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Will I get
some kind of credit on my taxes for that money that the bank
sends to IRS? Yes. IRS will credit your account for the
amount received.
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Will IRS keep
sending the bank more and more levies and keep trying to get
my future deposits? No. IRS rarely sends even a second
Bank Levy to the same bank.
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Can IRS send
levies out to other banks or even send out a Wage Levy to my
employer? Yes. So it is important that you contact
IRS and let them know that you want to cooperate with them.
They will usually give you at least 21 days to begin
providing them with unfiled tax returns, financial
information, and any other information they may request.
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After IRS has
levied my bank account, can I close that bank account so IRS
will not get any more of my money? Yes. But remember
that IRS can use your Social Security Number to possibly
trace other sources of cash (bank accounts, retirement
payments, pensions, 401k accounts, etc.) and to
track down your employer(s) so they can send out additional
levies if you do not contact them and make some kind of
payment arrangements with them.
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But if I need
the money to pay my bills, won't they release the bank levy?
Always remember that IRS has established guidelines for bank
levies and their possible release, and if you do not meet
their guidelines for a bank levy release, then they will keep your
money even if you need it to pay your living expenses.
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Can they keep
me from paying my mortgage or rent or utilities and force me
out of my house or the place where I live? Remember
those guidelines and who makes them. However, if you have an
eviction notice or utility cut-off notice that has already
been sent to you, IRS will make arrangements with you that
will take your financial trouble into consideration. Most
people don't have an eviction notice or utility cut-off
notice, but if you do, then IRS will release your bank levy
(at least up to the amount of the eviction or foreclosure
notice and/or utility cut-off notices).
You should call them.
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I don't want
to talk them. I hear all kinds of stories about how mean
they are. Most IRS employees are very good people and
are very knowledgeable and helpful. Very, very few IRS
telephone representatives are mean or nasty. They are very
willing to help you, but remember that there are rules they
have to follow just like people who work anywhere else.
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So you really
think I should call them myself rather than getting someone
else to do it for me? It is in your best interest to
call them yourself. After you talk to them, you will be more
informed about your situation and you will have a better
idea of whether or not you need professional help. If you
get someone else to help you, it will probably cost you
money that you may not be able to afford right now.
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