If you received an IRS bank account levy it is imperative that you act quickly if you don’t want or can’t afford to have the IRS seize the funds in your bank account. It is important to find the best method that works for your unique situation. When you realize your bank account is going to be levied you will have no more than 21 days to act before your funds are seized. When your bank receives notification that the IRS will be seizing your funds they will freeze your account. The bank then makes the IRS wait 21 days before they send the funds over to them.
One important thing to know is that the IRS does not want to levy your assets, they would much rather resolve tax problems in another manner. The IRS uses levies as a last resort for collecting taxes from an unresponsive taxpayer. Most taxpayers end up getting in this situation because they realize they cannot pay the IRS and they avoid collection notices because there is little they feel they can do about them. What most taxpayers don’t realize is that there are actually many mechanisms setup by the IRS to allow taxpayers to get back on a good standing with the IRS, even if they cannot pay their taxes. Below are the three most common methods used to release an IRS bank account levy.
1) Pay the IRS in Full – Most likely if you have a bank account levy you cannot pay your taxes in full and that is the reason why you are in this situation in the first place. Sometimes thinking outside of the box a little can help you come up with some ways to come up with funds to pay off your taxes. Below are some ideas to come up with funds to pay your taxes owed, it can be a good idea to even use a combination of a few of these.
a.Borrow from family and friends – This is only a good idea if you know you will be able to come up with the funds to pay them back in the very near future. It is not a good idea if you can’t because there are other options you can use if that will be a problem.
b. Sell some assets – Do you have an extra car or some old stuff in the attic that may actually hold some decent value to it? You can either have a tag sale or put some stuff on eBay to quickly get some extra funds to put towards the taxes you owe.
c. Refinance your home – If you have equity in your home it is likely you will be able to refinance it and take that equity to pay towards the taxes you owe. Most likely you won’t have enough time to use this method before the IRS seizes funds so maybe you can borrow from family and friends while your refinance is being processed and then pay back your family and friends with the refinance money.
2) Enter into an IRS Payment Plan – There are a few payment plans offered by the IRS. The most common payment plan is an installment agreement. With an installment agreement you will be able to pay off the tax debt owed in monthly payments. This method is one of the most common forms of tax settlement. You may be able to qualify for this as long as you don’t have a history of defaults on these types of agreements. Once your installment agreement is accepted by the IRS the bank levy will be released.
3) File for an offer in compromise – An offer in compromise is a great program offered by the IRS that allows deserving taxpayers a way to settle their taxes owed for far less than the original amount to help them get back on track. A lot of taxpayers would like to settle this way but only few actually have their filings accepted. If you choose to use this method the IRS officer that you are dealing with may stop the bank levy while they are reviewing your case if they think you actually may have a chance of receiving this kind of relief. Once your offer is filed your bank levy will be paused and once it is accepted it will be released.
Bank levies are a very harsh collection mechanism. It is important to closely, but quickly examine all your options if you cannot afford to have the IRS seize your funds. It may also be a great idea to talk with a tax professional about your situation. A tax professional can quickly analyze your situation and come up with a plan of action. Tax professionals are great at stopping bank levies and coming to another form of resolution with the IRS. No matter what action you take, act quick as time is very limited.
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