The IRS collects taxes on behalf of the Government. Many times, citizens do not pay their taxes on time and end up ignoring the various notices issued by the IRS due to various reasons. This can prove to be a costly mistake, since the IRS has powers to seize your bank account. This is called a bank levy, and banks have to divert all the money upto the amount you owe the government, to the IRS and this rules applies to the salaried class, business class and even big corporations.
In case you have forgotten to open your mail, which contained an IRS levy notice, then on the particular date mentioned in your notice, your account will be taken over by the IRS. You will then have 21 days to solve your problem. Your bank will keep the amount you owe to the IRS in an escrow account. If you do not manage to convince the IRS to get your levy released within those 21 days, then that amount gets transferred to the IRS account, and that could make it very difficult for you to recover that money back. You can still use your bank account during those 21 days and can also deposit and withdraw money 'other than the levied amount'.
If your Tax liability is less than 10,000 dollars in salary taxes or 20,000 dollars in personal taxes, and if all your previous returns have been filed on time, then all you need to do is contact the IRS immediately and work out an installment agreement. If you have any severe financial problem or have filed for Bankruptcy, then that could also help in getting your levy released, but only if you can prove your point to the IRS.
If your tax liabilities are more than 20,000 dollars, then you can hire an enrolled agent, an expert Tax Attorney or a CPA [Certified Public Accountant] to solve your problem. Most of them do a free assessment of your problem and could guide you properly, once they have understood your case. Their charges could be quite high, but their experience and expertise could help in quickly getting your levy released.
The IRS normally levies a wage to physically motivate you to pay your taxes and settle your case as soon as possible. Hence, act immediately. As soon as your account gets 'levied', contact the IRS and show them that you are willing to compromise and to sort out the matter as soon as possible. It also helps if you have been paying taxes regularly for the last 7 years and do not have any other notices or penalties pending against you. This IRS levy is also their way of training you to be more tax compliant in future. Anyone who has been 'levied' is not liable to forget that in a hurry and in future, would try to avoid the same mistakes.
So, do not get into a panic if your bank account has been 'levied'. If you are unsure of handling the problem, then get professional help, but do not ignore this problem. It can only get worse. Act immediately and you could soon get those levies released.
Author Resource:-
Sacramento CPA Firm Murray and Young can help you with Tax Planning and IRS Representation services. You do not have to be afraid anymore. For 2008 Tax tips visit our website: http://www.april15.com.
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