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Frequently Asked Questions about an IRS Bank Levy

Wednesday, October 26, 2011

How is a taxpayer notified about an IRS bank levy? Taxpayers will receive a copy of the original IRS bank levy that the IRS sent to his or her financial institution or employer. Most people find out about the IRS bank levy through their financial institution or employer before they receive the notice in the mail. What can I do after the IRS bank levy is on my bank account? Most people will contact a tax attorney or tax advisor to represent them before they contact the IRS about the IRS bank levy. The professionals know how to take care of the IRS, and are experts in negotiations. Taxpayers who contact the IRS without representation often receive unfavorable results. How long does it take to release the bank levy? Every situation is different, but most people will have the IRS bank levy lifted in one to two business days. Exceptions to this rule are: • You owe a large sum of money • You have not been in compliance with your taxes for years • A Revenue Officer is assigned to your account Does the IRS give taxpayers a warning before they issue an IRS Bank Levy? The IRS sends out a Final Notice of Intent to Levy to the current mailing address they have on file. Taxpayers who move may not receive the notice. Can the IRS take my Social Security benefits? The IRS can levy up to 15% of your Social Security check. What is exempt from an IRS seizure? The IRS will not take certain clothes, furnishings, personal effects, fuel, tools used for work, books, unemployment benefits, workers compensation, child support, and public assistance funds. How can I prevent an IRS bank levy from happening in the future?

In order to prevent an IRS bank levy from happening again, you need to maintain compliance with your tax liabilities. Tax attorneys and tax advisors will help you accomplish this.

How does the IRS know my bank account number(s)?The only way the IRS knows your bank account number(s) is if you earned interest from previous tax seasons. Banks are required to report any interest paid to the IRS. Banks send taxpayers a 1099 Interest Income form after the first of the year. If you do not accrue interest in your bank account, the IRS does not know about it. If you submit into an installment agreement, you are required to list your bank account numbers, and are subject to an IRS bank levy. Can a joint bank account be subject to an IRS bank levy? The IRS can issue bank levies to any account that has the taxpayers social security number attached to it, even if they do not own the account. The IRS will release the bank levy if the taxpayer can prove that the money is not theirs. Can the IRS take my IRA? The IRS can levy IRAs as a final attempt to collect money to satisfy your tax liabilities. If this happens, the funds are taxable. What is the difference between a tax lien and a levy? A tax lien is a claim against your property, and it shows up on your credit report. A tax levy takes your wages and any money in your bank account to pay your tax liabilities. IRS Resources – Payroll taxes Do you need more information about payroll taxes? Search Google for your state and type in the keyword bank levy. Look for this 2011 IRS table to figure out the amount that is exempt from your wages, salaries or other incomes. The IRS Publication 15, or Circular E Employers Tax Guide, is also helpful. Here is a link to the Beverly Hills Bar Association.