Tuesday, October 4, 2022

Can The Irs Freeze Your Bank Account

Don't Miss

Irs Bank Levy: What To Do When The Irs Freezes Your Bank Account

The IRS Wants To Monitor Your Bank Account: Watch Out! – Steve Forbes | What’s Ahead | Forbes

Its no secret that IRS is a tough creditor. As the government, they wield enormous control and resources. Ive even documented in a previous article about the ruthless collection methods that the IRS can use against you.

Of all the torturous tools the IRS has in its toolbox, the most feared has to be the bank levy What makes the bank levy is so dreadful is how intrusive it can be.

If youve found your bank account frozen, then youve got to act fast. An IRS freeze on your bank account can prevent you from paying for necessities like electricity, food and your other bills.

This article will act as the first step in getting your account back. Ill equip you with a basic understanding of how to fight an IRS bank levy.

Of course, reading this article alone doesnt guarantee that the IRS will release the bank levy. Often, youll need a qualified tax relief professional to successfully persuade the IRS. One such tax professional is Community Tax, they work with most states and can help if you have over 10K in debt.

Before we get into how to fight a bank levy, lets understand what it actually is.

Suspicious Or Illegal Activity

Banks have the authority and discretion to freeze accounts if they suspect account holders are conducting illegal activities. Banking regulations became stricter after events like the September 11 terrorist attacks in order to crack down on criminal enterprises that use financial institutions to conduct their business.

Banks routinely monitor accounts for suspicious activity like money laundering, where large sums of money generated from criminal activity are deposited into bank accounts and moved around to make them seem as though they are from a legitimate source. Suspected terrorist financing is also another reason why banks often freeze accounts.

Your bank may also freeze your account if you write and cash bad checks. You may it’s okay to try to cash a check you’ve written even if you don’t have enough money in your account. After all, it may take a few days for the check to clear, right? But the bank doesn’t think so. Knowingly writing checks on an account that doesn’t have enough moneyand doing so regularlyis actually considered fraud.

In most cases, large and unusual deposits can flag your account, even if they’re legitimate. So if you win big at the casino, you’ll likely alert the bank when you try to deposit your windfall.

How Can I Avoid An Irs Levy

As you can imagine, the best pay to stop a levy is to prevent one in the first place! If you have unpaid taxes, you should consult with us immediately so that you can avoid a levy entirely! There are a number of ways you can avoid a levy.

If you are actively working to resolve your tax debt, the IRS will not levy. Many times, we can avoid an IRS levy by entering into an IRS installment agreement , by settling tax debt for less than owed using an Offer in Compromise, or by showing a financial hardship exists.

If the IRS already issued a Final Notice of Intent to Levy, we can avoid the levy by requesting a Collection Due Process Hearing. Sometimes, we can use a Collection Due Process Hearing to give us time to propose an installment agreement or Offer in Compromise.

Don’t Miss: Chase Quickpay Fees

What To Do If A Levy Is Initiated

When the IRS announces an intention to levy your assets, the most important thing is to NOT ignore the notice. If you do nothing, you will lose your money. However, the good news is that the IRS wants to collect the full amount owed and is typically willing to work out a payment arrangement.

If you receive notice, its a good idea to consult with a tax resolution specialist regarding your options. Depending on the amount of taxes you owe, you may be eligible for an installment agreement, an Offer in Compromise, or to possibly be declared currently not collectible. A tax resolution firm can help you get the best settlement possible from the IRS, without draining your bank accounts.

If you are facing a levy and want help from the best, click on the form to the right or call 88-411-5389 , and someone from our A+ BBB Rated staff will contact you immediately.


Problems & Solutions

In June of 2010 I owed over $89,000 to the IRS and nearly $28,000 to the Department of Revenue for my state. I received your information in the mail and immediately phoned you for more details. I sign… Read More

Words cannot describe how happy I am with Levy & Associates and the outcome of my tax situation. As you know I have been dealing with IRS tax issues for over five years. You also know I paid a profess… Read More

Look For Administrative Failings

Irs Bank Account Freeze

As we mentioned earlier in this article, the IRS has a very strict collection process to follow. You may have grounds to have the IRS release your bank levy if the following criteria are met:

  • The IRS levied your bank account prematurely
  • They levied your account before issuing you the proper notices
  • An installment agreement, offer in compromise, or innocent spouse request was under consideration, or was accepted
  • The statute of limitations for collecting your overdue taxes had expired.

There are many more requirements that the IRS must comply with. You can likely find fault with the IRS if you know where to look. This can require hours of research, but is totally worth it if you manage to get the IRS off your back.

If youre pressed for time however, you wont have the luxury of research time. In such instances, remember that a tax relief professional like Community Tax knows the IRS inside out and can help you identify any breaches of your rights.

Recommended Reading: Edit Bank Statement Pdf Online Free

What Is A Bank Levy

When you owe a balance due to the IRS and fail to resolve that balance in a timely manner through one of the approved resolution methods, the IRS takes increasingly stern action to try and force compliance on your part. One of these avenues is through an IRS bank levy.

An IRS levy is defined as, a legal seizure of your property to satisfy a tax debt. In the case of an IRS bank levy, the IRS takes money from your checking or savings account in order to satisfy your outstanding tax liability. Although the IRS is required to send notice of its intent to levy under statute, it usually does not tell you when it plans to seize money out of your checking account.

Sometimes this puts taxpayers in a precarious position because they count on funds being in these accounts that are no longer available due to the IRS levy.

The IRS bank levy process is initiated by a notice sent from the IRS to the bank that is holding your assets. Usually, the IRS will only send one levy notice at a time, but they will eventually get around to sending notices to every bank where they have reason to believe that you are holding assets in.

From this point, the bank retains the money for 21 days prior to releasing the funds to the IRS. After this 21-day period, the bank, by law, must release the funds to the IRS. No further action is required on the part of the IRS to receive funds. Taxpayers will not have access to any funds levied during this period.

Possible Reasons The Irs Could Freeze Your Assets

Paying taxes is one of the most important responsibilities of a citizen. These taxes go to a good cause like improving health care, education, and other vital aspects of building a fully functioning nation. While the U.S. tax law is notorious for being so complicated, there are measures in place to help people resolve their tax issues.

However, in cases where individuals neglect their taxes for an extended period, the IRS could take more drastic actions. This article will explain why the IRS could hold and freeze your assets, including your bank accounts.

Don’t Miss: Do Banks Sell Silver

Overcoming Feelings Of Shock And Take Action

Do not let a sense of shock stop you from getting counsel on your tax problems as soon as possible. You may have been caught unaware if you did not receive or pay attention to notices the IRS sent to you before freezing funds in your account.

To prevent the freezing of your funds, you would have needed to make payment arrangements or prove that the tax bill was in error. A skilled tax attorney who handles litigation is your most important ally at this point. If you have received a notice of impending freezing of funds, explore your options with the help of an Atlanta, GA tax attorney at Bomar Law Firm, LLC.

What You Should Do

Help, IRS Froze My Bank Account, Former Agents Explains What To Do, I Need My Money Back ASAP!!!!!

You should receive notice before your account is frozeneither from the entity requesting the freeze or from the bank. In most cases, you’ll receive a notice from both. Either way, make sure to contact your bank immediately if your account is frozen to see what steps need to be taken and to make sure there’s no mistake. Remember that if you ignore a frozen bank account, you can make the problem worse, causing drops in your credit score and a build-up of bank fees.

If your account is frozen because of activity you know is legitimate, go to the bank with proof. If you can show that there’s no reason for the freeze, the bank will probably release the suspension and grant you full access to the account again.

Once your account is frozen over unpaid debts, it is crucial to get the creditor’s attorneys information from your bank immediately. You need to have a better idea of what’s going on with your account and work out a payment arrangement.

Consider consulting legal help. Consumer bankruptcy attorneys do not force you to pursue bankruptcyrather, they help you understand the legal actions that creditors can take, as well as what your rights are in these situations. For debts owed to the government, there’s very little you can do to get access to your account. And keep in mind, these debts don’t go away even if you go bankrupt.

Also Check: Do Banks Buy Silver Bars

How Long Can Irs Pursue Back Taxes

So, IRS can pursue an unpaid tax for up to ten years from the date of assessment order. The statue of limitation for collection of taxes is vide 1998 IRS Reform and Restructuring Act which brought in IRC § 6502, that provides the IRS a period 10 years from the date of assessment to collect the unpaid tax due .Therefore ,once the ten years period lapses, usually ,the IRS has to no legal way to collect that tax. The relevant provision is given below:

Length of period

Where the assessment of any tax imposed by this title has been made within the period of limitation properly applicable thereto, such tax may be collected by levy or by a proceeding in court, but only if the levy is made or the proceeding begun

within 10 years after the assessment of the tax, or

Events that may extend 10 years period for collection of tax

There are some situation under which the IRS gets more time than 10 years . These events in which statute of limitation of 10 years for collection of tax dues gets extended are:

  • 1. The tax payer is out of USS for more than six months continuously, IRC 6503 suspends the time limitation .
  • 2. If taxpayer files for bankruptcy , time limitation gets extended
  • 3. If the taxpayer applies for an offer-in-compromise , IRS may request for a voluntary waiver of the statute of limitations for five years as a condition. If you sign that the collection statute of limitations gets extended.
  • Will The Irs Freeze My Bank Account

    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.

    Read Also: Boa Overdraft Limit

    Can You File Suit Against Irs For Wrongful Seizure

    The law has protected citizens of USA from reckless or intentional, or by reason of negligence, disregards any provision seizure, action by IRS .Following two distinct provisions under 26 US Code that empowers victims to file civil law suit against the United States for such reasons .

  • Under 26 U.S.C. § 7433, if any officer or employee of the IRS recklessly or intentionally, or by reason of negligence, disregards any provision or regulation under Title 26 in connection with the collection of federal tax with respect to a taxpayer, such taxpayer may bring a civil action for damages against the United States.
  • Under 26 U.S.C. § 7426, if the IRS wrongfully levied on property or wrongfully sold property pursuant to a levy, any person claiming an interest in such property may bring a civil action against the United States.
  • Bank Secrecy Act Of 1970 Violations

    TurboTax user hacked, gets bank account frozen after IRS ...

    The Bank Secrecy Act of 1970 was created to ensure that financial institutions report any deposits over $10,000 and file suspicious activity reports if they believe a customer is trying to avoid these reporting requirements.

    For example, if a customer makes multiple deposits that are just slightly under $10,000, such as $9,950 or $9,990, they could be laundering money or committing check or wire fraud.

    Or they could simply be omitting to report these deposits as income to avoid paying taxes, all of which are illegal.

    If the bank reports the customer activity to the IRS on suspicion of violating the Bank Secrecy Act of 1970, the IRS may freeze the bank accounts until a further investigation is done by the Department of Justice.

    You May Like: Td Bank Atm Overdraft Limit

    Get Legal Help Paying Taxes You Owe To The Irs

    It’s important to pay the taxes you owe the IRS because non-payment can have a significant impact on your finances and quality of life. An experienced tax attorney can help you work out a plan that fits within your budget and needs, while ensuring proper procedures are followed.

    Thank you for subscribing!

    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.

    Don’t Miss: How To Edit A Bank Statement

    Sh Block Tax Services Can Help Resolve Your Business Tax Levy

    Whether youve already received an IRS Final Notice of Intent to Levy, are concerned that you could receive one soon, or simply want to right the ship with your business tax liability, S.H. Block Tax Services can help you resolve your tax problems quickly and affordably.

    When you work with S.H. Block Tax Services, well use our decades of shared experience to work with the IRS to negotiate a Release of Levy through one of several tactics including an Offer in Compromise or a cost-effective installment agreement. Contact us today by calling or completing this brief form to get started as soon as possible.

    The contentprovided here isfor informational purposes only and should not be construed as legal advice on any subject.

    Request A Cdp Hearing

    The IRS Just Seized Your Bank Account?

    If you have received a Final Notice of Intent to Levy from the IRS, you can stop the bank levy by requesting a Collection Due Process hearing. You have to do so within 30 days from the date of the letter or notice. Once you appeal, you will have some time to work out a resolution with the IRS . You can use a licensed tax professional to work on your behalf. In some cases, you may appeal because you are currently in bankruptcy proceedings, or the collection statute of limitations has expired.

    Don’t Miss: Which Banks Sell Silver Bars

    How Does An Irs Bank Account Levy Work

    After the 30 day grace period that ends from the Final Notice of Intent to Levy letter, the IRS decides which type of levy to use, including bank account levies and wage garnishment.

    If the IRS decides to use a bank levy, it tracks down your bank account. In some cases, the IRS has your banking details from previous tax returns, and in other cases, it uses your social security number to find your bank account.

    Next, the IRS will send Notice of Levy on Wages, Salary, and Other Income, generally Form 668ADO to your bank. Your bank must comply and freeze the funds. While your account is frozen, you wont be able to withdraw the money. At this point, you have an additional 21 days to resolve the situation, otherwise, the bank will remit the funds to the IRS on the 22nd day.

    If you dont reach out to the IRS during that time, the funds in your account go directly to the IRS. If the bank doesnt comply, the IRS holds them liable for the taxes. As a result, the bank always tends to comply with these demands for payment.

    The IRS only seizes the funds in the account when the levy was placed. If you make additional deposits during that time such as direct deposit paychecks, the IRS has to issue a new levy to get those funds. If you have outstanding checks or automatic payments when the freeze goes into effect, you may want to make a deposit to cover those impending withdrawals.

    More articles

    Popular Articles