Bank Levies - Bank Account Levy Information

To resolve a tax debt, federal or state authorities may rely on enforced collections such as bank levies, wage garnishments and property seizures, in which property rights are assumed by the government. 

If you do not pay your taxes (or make arrangements to settle your debt):

• The government can seize and sell property that you hold (such as your car, boat, or house), or
• The government can levy property that is yours but is held by someone else (such as your wages, retirement accounts, dividends, bank accounts, rental income, accounts receivables, the cash value of your life insurance, or commissions).

The government usually levies only when the following three conditions have occurred:

• The government assessed the tax and sent you a Notice and Demand for Payment
• you neglected or refused to pay the tax, and
• The government sent you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy. The government usually sends this notice to your last known address by certified mail, return receipt requested, but they may give this notice to you in person, or leave it at your home or your usual place of business.

If a levy is places on your bank account, the levy attaches deposits that have cleared and funds that are available for withdrawal when the levy is received, up to the amount of the levy.  The bank must wait until 21 days after a levy is received before sending the money.  The holding period allows you time to resolve any dispute about account ownership, or get professional advice on your situation.  After 21 days, the bank must send the money, plus, if applicable, any interest earned on that amount.  To cease enforced collection, the taxpayer must work with the taxing authority, by presenting a reasonable resolution and working toward fixing the tax problems.

If you have been levied, or fear a levy is a possibility, please contact Larson Financial to get answers specific to your situation.

Wage Garnishments

Wage garnishments are levies automatically deducted from wages, salary, commissions, or other payments for personal services, and applied to the tax liability.  A garnishment does not need to be served each time you are paid.  Once we serve a garnishment, the garnishment continues until your tax debt is paid in full or other arrangements are made to satisfy the debt, or the time period for collecting expires.

The IRS can also levy or garnish the following direct payments:

• Federal retirement annuity income from the Office of Personnel Management
• Social Security benefits under Title II of the Social Security Act (OASDI)
• Federal contractor/vendor payments, or
• Federal employee salary and travel payments.

 Please contact Larson Financial to get answers specific to your situation.