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IRS Bank Levy – How Much Do I Have to Worry About Losing the Money in My Account?

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IRS Bank Levy – How Much Do I Have to Worry About Losing the Money in My Account?

 

A bank levy can be disastrous – checks start bouncing, bank charges for returned checks, and concern over how you are going to get past this and pay your bills.  There are two things you need to understand when dealing with a Bank Levy, 1) Mandatory 21 day wait period, 2) Bank levy is NOT a continuous levy.

Mandatory 21 Day Waiting Period

Internal Revenue Code 6332(c) requires a mandated waiting period of 21 days after service of the levy, to allow you the opportunity to contact the IRS, negotiate a release of the levy, and have the money returned to your account.  The bank places a hold on the money, like a debt so that it is not available to you.  The money has not been sent to the IRS yet.  After 21 days, if the bank does not receive a release of levy, the funds will be sent to the IRS.  Note that having an exchange with the bank about how difficult this is for you is pointless.  The bank CANNOT release the funds without a levy release from the IRS.  The IRS will want three things from you to potentially release the levy; communication, financial information, and compliance.

Communication. The IRS will want either you or your representative to contact them regarding the IRS debt.

Financial Information.  The IRS will need you to present a completed Collection Information Statement (Form 433-A or Form 433-F) to prove the taking of these funds will be an extreme financial hardship.

Compliance.  Any required outstanding returns will need to be filed. 

 

Bank Levy is NOT a Continuous Levy

Under Internal Revenue Manual 5.11.4  a bank levy is not a continuous levy.  The bank will place a one-time hold on whatever is in the account ON THE DAY when the levy is served.  This will not affect future deposits and the IRS does generally refrain from making successive levies on the same source.  This does not stop the IRS from issuing a bank levy on multiple financial institutions at the same time.  They are trying to capture as much as they can AT ONE TIME.

 

Remember the clock is ticking, you have 21 days to convince the IRS it is in their best interest to release the funds because this would be an extreme hardship to you.  This may prove to be a difficult task especially if you have outstanding returns. 

 

If you feel completely in over your head, we suggest that you contact a Certified Tax Resolution Specialist. 

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