How You Can Avoid A Bank Levy ?
A bank levy can be issued for several reasons. It is most commonly used by the IRS and creditors. For instance if you have not paid your taxes or a debt that you owe.
When a bank levy is issued it means that your account is frozen you are not able to withdraw anything out of your account. And the funds that was in your account can and usually will be seized.
Before a person has a bank levy issued to his/her account they will receive a letter, a phone, or some type of notice letting them know that action will be taken if they don’t pay up on what they owe.
It is important that as soon as the bank levy is issued to your account that you contact the court as soon as possible if it is issued by a debtor. There is a way for you to be able to receive your funds back and make a payment plan with the debtor. This has to be done within 30 days of the levy being issued.
Now when the IRS issues a levy the money is not refundable and the bank levy will stay on your account until you pay all of the taxes that you owe. Although you cannot withdraw money at this time you are able to make deposit so if you have an employer that deposits your check into your account it will be seized.
When a bank levy is issued to an account the banks usually will charge the account holder $100 or more for every time there is a bank levy issued to that persons account.
The IRS served banks with memos to guide them on how they will work with them when issuing bank levyies. They send these memos to make banks aware of the laws governing the disclosure of bank account information.
The law that was shared on business tax recovery website was “Title 26 United States Code Section 6333 of the Internal Revenue Code (IRC) authorizes the Service to examine any books or records pertaining to property or a right to property subject to a levy. 1 The Treasury Department interprets this section to mean that, at a minimum, the Service would be entitled to a bank record indicating a levied accounts balance on the date the levy was served.”
This is only a portion of one of the guiding memos that the IRS has served banks with. When an IRS issues a bank levy the bank is required to give the IRS all of the taxpayers account information either willingly or by summons.
When the bank levy is issued the account is frozen immediately whether the bank gives the information right then or if the taxpayer’s information has to summonsed.
One way to avoid this happening to you is of course pay your taxes and your debtors. It is not a pleasant thing to go to your bank account one day and find you cannot withdraw money or pay your bills.
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