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The Internal Revenue Service (IRS) details on its official website the consequences of having an outstanding tax debt, receiving a Final Notice of Intent to Levy and Your Rights to a Hearing in your name, and not responding promptly.
When there is no bilateral effort to pay or show intent to settle the obligations, the tax agency may determine that it is necessary to apply a levy:
“An IRS levy is the legal seizure of your property to satisfy a tax debt. Your wages, money in your bank or other financial account can be taken; or your vehicle(s), real estate, and other personal property can be taken and sold,” the agency explains.
The IRS will seize bank accounts and assets of those who put off this tax-related procedure
Paying your taxes on time is essential, even if an extension was obtained to file the return, since this procedure only provides more time to submit the document, not to pay the taxes.
If this obligation is not settled on time, the agency may place a lien on the taxpayer’s property. If the outstanding debt still is not resolved, the IRS may determine that a levy is the next action to take.
IRS bank account levy: what happens if the Government takes this measure
According to the authorities, after the IRS decides to officially issue a levy on the bank account, they will have to wait 21 days before they can withdraw the funds and apply them toward the obligation.
This period is established by the Internal Revenue Code (IRC) and is intended to give the taxpayer time to contact the agency and set up a payment plan that shows the intent to pay the debt or to inform the IRS if mistakes were made.
“When there is a bank levy, this means that the account funds are frozen as of the date and time the levy is received. Normally, the levy does not affect funds deposited into the account afterward,” the authorities say.
In addition, any other asset on which a lien was previously placed may be levied.
In what situations the IRS can release bank accounts and assets
The sanction could become void when any of the following situations occurs
- The debt was paid off
- The period to collect the tax expired before the levy was issued
- Releasing the levy would allow the taxpayer to pay the taxes
- An installment payment plan was established and release of the levy was agreed upon
- The penalty could prevent the taxpayer from paying basic day-to-day expenses
- The value of the property is greater than the amount owed
If the measure is lifted for any reason other than the first, it is essential to pay as soon as possible to avoid it being imposed again.