Once you receive a Notice of Intent to Levy from the IRS, a bank levy or other enforced collection action is imminent. You need to take action immediately if you want to avoid having the money in your bank account seized and applied to your tax debt.
Notice Of Intent To Levy
The IRS generally has to send you a Notice of Intent to Levy in the mail before seizing your assets. Read this notice carefully, and pay particular attention to the deadline to respond.
If you don’t send a written response and ask for a Collection Due Process (CDP) hearing, the IRS can send a notice to your bank asking them to freeze the funds in your account. You won’t be able to take the money out once it’s been frozen.
Your bank is required to wait 21 days before handing the money over to the IRS. You can still contact the IRS and try to negotiate a release of the levy at this point, so contact a tax attorney immediately.
At the CDP hearing, you can suggest collection alternatives, dispute the tax liability, or ask the IRS not to seize your bank funds because it would cause a financial hardship.
If you can afford to make monthly payments, consider negotiating an installment agreement. You can request a monthly payment that fits your budget as long as you agree to pay off your tax debt within a reasonable amount of time, which could be up to six years or the expiration of the collection statute of limitations.
If you just need to stop the levy to avoid a financial hardship—such as missing a mortgage payment or having your utilities shut off—you can ask for your account to be classified as currently not collectible This gives you a temporary reprieve from IRS levies while you get a handle on your financial situation.
Have a tax audit question? Contact Venar Ayar