As one of the most drastic actions they can take, the IRS can apply a levy to an account listed in your name or in the name of the organization that technically holds the tax debt. A levy can be referred to as a “freeze” or even a “seizure” of the assets in the account since the IRS has permission to withdraw from the account at its discretion.
All of this may sound like bad news, but the good news is that a bank levy can be removed. Referred to as a “bank levy release,” the IRS will typically agree to one after an agreement outlining repayment is made or when they acknowledge that the levy will create an unreasonable economic hardship.
Getting the IRS to agree to a bank levy release is not always easy, however. You will need to document the hardship, work out an agreement for repayment, or satisfy one of the other conditions that effectively require them to release a levy.
Instant Tax Solutions is here to help you get the relief you need. We have worked with individuals and small business owners grappling with the stress of having a levy applied to their bank accounts.
We understand the processes, documentation, and financial reasoning that the IRS uses to determine whether to consent to a release.
If you are having trouble with the IRS freezing your accounts or threatening to take other assets, reach out to the tax professionals who can help you get back on the right track. Schedule your consultation to get answers to your questions and learn about your options when you call (888) 886-5526 or contact us online today.
Get Assistance With Securing a Spokane Tax Levy Release
The period permitted for collection to occur lapsed prior to the levy’s issue date
The levy creates an economic hardship for the filer, preventing them from being able to pay basic living expenses
The levy prevents the filer from effectively paying back their taxes
The funds (or other assets) held in the levy exceed the amount owed
Levies can also be released when the filer agrees to pay an Offer in Compromise or comes to another similar agreement that eliminates the tax debt owed.
Basically, arranging for a bank levy release requires that you either reach an agreement with the IRS or convince them that the levy makes it impossible for you to continue earning income and functioning as a normal person. Alternatively, you will need to determine an acceptable installment agreement or other arrangement that basically puts you back in good standing.
Accomplishing either can take a substantial amount of documentation, demonstrating your hardship or inability to pay with levy in place.
Instant Tax Solutions wants to help you understand the full financial situation and your legal options from top to bottom. We can help you analyze your finances and determine the exact amount you should owe.
In some cases, we have been able to dispute the amount owed or get the IRS to lower the amount owed after an amended return has been filed.
Reach out to us to explore all of your options and get control over your finances again. We not only want to help you get back into your accounts, but we can also help you prepare a strategy for getting rid of your tax debt once and for all.
What Is the Spokane Bank Levy Process When You Owe Money?
They will first notify you of failure to pay and provide warnings about penalty fees and interest on the uncollected back taxes. After several weeks to months of continued non-payment, they may then place a lien on owned property, especially real estate.
Most often, the IRS will then send a Final Notice of Intent to Levy and a Notice of Your
Right to a Hearing, which will be mailed to you no less than 30 days prior to the levy being applied. You often have the option to delay the levy in order to have a hearing or to begin working out an agreement for repayment.
In some situations, the IRS may opt not to offer a hearing and take swifter action to place a levy. This is especially true when they fear that the accounts in question may not have any funds if they delay, such as when the funds may be transferred or withdrawn in order to avoid the levy, and may also occur when an employer fails to pay their employment taxes in full.
Once a levy has been placed on an account, all funds in that account on the date the levy begins will be “frozen” and inaccessible to the account holder.
Banks are required to give account holders 21 days from the date the initial levy begins for them to dispute the levy or take other actions to remove it immediately. If, after 21 days, the levy has not been effectively disputed or removed, then the bank will begin transferring the requested funds to the IRS, along with any interest and other penalties charged.
Note, too, that a levy can be placed on any holding or asset, not just a bank account.
You may have your retirement accounts, including IRAs and pensions, levied. You may also have a portion of federal payments made in connection with a stimulus payment, tax return, or other disbursements levied.
In some cases, the IRS can even levy your home, your care, or other property you own.
What Happens When a Bank Levy Is Released?
The release of a levy does not mean that the IRS cannot continue to take action to collect the back taxes you owe. They may try other methods that they estimate will not result in hardship, such as a levy on income or non-essential property.
You may also face an increasing risk of criminal charges connected to non-payment, especially if back taxes were assessed after the IRS examined undisclosed income or assets.
A filer’s best course of action is to make a plan to pay off the tax debt they owe however they can. They can also request a temporary stay of collection actions, such as by declaring that the amount is currently not collectible because the necessary funds are tied up or needed for basic living expenses.
Options for relief from tax debt most often include:
Offer in compromise — An agreement to pay down a reasonable portion of the owed back taxes, either as a lump sum or in a series of payments, with the remainder of the debt considered settled.
Installment plan — Reasonable payments made through an installment agreement that help you chip away at the debt owed, month by month until fully paid off
Penalty abatement — Can remove certain penalties, along with their interest, applied for non-payment, lowering the amount owed
Filing an amended return — Sometimes missed deductions and credits add up, and these can be applied to the total balance of the debt if an amended return is filed within three years of the original filing due date
Appealing a Denied Request for a Bank Levy Removal
If you attempt to have a bank levy removed through one of the requests or options listed above, but the IRS denies your proposal, you have the option to appeal the denial. A Collection Due Process (CDP) hearing will be scheduled, where you can present the financial and personal details you consider relevant to your request.
Preparing for an appeal often requires the knowledge and experience of a seasoned tax lawyer in Spokane. They can help you assemble the needed documentation and scrutinize the assessments made by the IRS, ensuring the highest level of accuracy possible, and can also help you understand the reasonings the appeals office will look for in order to weigh the merits of your appeal.
An appeal is often your last opportunity to have a levy removed, aside from paying the debt in full. Once you request an appeal, you will also have the option to try and form alternative agreements, such as an installment plan, in order to avoid the levy.
Get Help Removing a Bank Levy and Getting on the Path to Good Standing
Often, the IRS will use the looming threat of a levy or lien to provoke those who owe back taxes into action. Generally, they prefer for individuals to make payments voluntarily, and that may include agreeing to an offer in compromise or an installment plan.
Levies are often not the most effective means of collecting the money they are owed, and they are often used as a last resort to take that money by force.
Instant Tax Solutions can help you explore all available options for avoiding that outcome. You gain the benefit of our careful eye and our knowledge gleaned from years of helping out people just like you.
We can also help you form a plan to get on top of your owed back taxes while also preparing for any taxes you may owe in the years ahead. Today is always the best day to start, so let us help you find the path to a worry-free financial future.
Find out how our tax professionals can help you with a levy release and more when you call (888) 886-5526 or contact us online to schedule a confidential consultation today.
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