A tax levy allows the Internal Revenue Service (IRS) to use its statutory authority to take or seize your personal property. One type of personal property that the IRS can take from a person with tax debt is bank accounts. All bank accounts that a person has – single or joint – are potential targets for the IRS.
TRIGGERING A BANK LEVY
The trigger for a bank levy is not paying taxes on time or not paying taxes fully – for example, paying half of your tax bill. The IRS has time periods that apply to payments. The IRS can also offer a payment plan to lengthen the amount of time for payment. If you agree that you owe a certain amount of taxes, working with the IRS on an appropriate payment approach is likely your best strategy. However, if you disagree with the IRS or think that the IRS made an error in its calculations, you will need to follow a different course. A California tax attorney can help you with this approach.
RESPONDING TO A BANK LEVY
Over time if you have not paid your taxes, you will receive a notice indicating that you have debt requiring payment. This type of notice often has a ten-day period for response. This notice may eventually be followed by another notice informing you that the IRS will place a levy on your personal property. One type of levy is a bank levy in which the IRS will seek the money you owe from your various bank accounts. Some exemptions apply to these levies; however, in general, most of your money will likely be subject to the levy. You will usually have 21 days to respond to the levy notice. During that time, you may be able to negotiate a different payment approach rather than the IRS raiding your accounts. One approach is negotiating an amount for the full payment that considers your concerns or any obvious errors in calculating the debt amount. Another approach may be setting up a payment plan. As stated above, a payment plan was an option earlier in the process. If you wait until this point, your debt will likely have accumulated interest. A California tax attorney can help you figure out the best strategy for resolving a bank levy with the IRS.
Not Responding to Bank Levy
You may decide that you do not want to respond to a bank levy because you disagree with the IRS. You may also identify an error in the calculation, or perhaps the information is actually not focused on your tax return. Maybe you're interested in a hearing instead of making a payment plan. Your intentions need to be made clear to the IRS, and you need to prepare for this hearing. If you do not respond at all, you will likely receive a final notice with 30 days to respond, and after that, the levy will be initiated. A California tax attorney can help you work through these challenges and how to prevent the lack of response from hurting you financially.
How much money can be taken from your account?
Unlike the garnishing of wages, the IRS may take all of the money from your accounts, with some exemptions. You should contact a California tax attorney to discuss exemptions and address your other tax levy concerns before you.
Mistakes the IRS may make
During this process, you should be on the lookout for mistakes that the IRS can make. For example, the IRS may send you someone else's tax information. The IRS may also make calculation errors. The IRS could also neglect to send you all the property notices before engaging in actions. You may agree to a payment plan with the IRS that requires removing your tax levy, and the IRS may forget to remove it. A California tax attorney can help spot problems of this nature and prevent you from being harmed financially due to the IRS's mistakes. Call or go online today for a free consultation.