Bank Levies & Wage Garnishment Release Services
Bank levies and wage garnishments are two common ways that the IRS can collect a tax debt from individuals and businesses. In most cases, you can prevent a levy or garnishment by taking a proactive approach toward squaring your tax debt. But before you can do that, you have to understand what is happening and what options you have as a taxpayer.
What Is an IRS Bank Levy?
Simply put, an IRS bank levy occurs when the IRS seizes money directly from your financial accounts to help satisfy a tax debt. It is one of the most aggressive collection tactics the IRS can take and can cause serious financial difficulties for you and your family.
The IRS issues bank levies to taxpayers who owe an outstanding tax balance and fail to pay off their debt within a certain timeframe — or at least set up a formal arrangement with the IRS to resolve the balance.
Prior to the IRS sending you an official Notice of Levy, the following must occur:
- The IRS sends you a Notice and Demand for Payment.
- You fail or refuse to pay the amount owed.
- The IRS sends you a Final Notice of Intent to Levy and Notice of Your Right to a Hearing at least 30 days before the levy takes effect.
- The IRS sends you a notification of Third Party Contact informing you that the IRS may contact third parties to determine and collect your tax debt.
Once the levy is enacted, your bank will hold the funds requested by the IRS for 21 days. During this time, you will not be able to access the money in your bank account. Once that period has elapsed, they will send the money you owe to the IRS — while also charging you a processing fee for doing so.
What Can be Levied?
- Retirement accounts
- Social Security Payments
- Bank accounts
- Your Driver’s license
- Rental income
- Accounts receivables
- The cash loan value of your life insurance
What Is an IRS Wage Garnishment?
Wage garnishment is a legal procedure through which some portion of a taxpayer’s earnings are required to be withheld by an employer for the payment of a debt. In other words, the IRS takes money straight out of your check to go toward paying off your debt.
Rather than taking a certain percentage of your income, the IRS calculates an exempted amount to leave you with based on your pay frequency, filing status (single or married), and number of dependents, then takes the remainder of the check. For most taxpayers, the exempted amount left in their take-home pay is less than what they would typically spend in a pay period, so garnishments frequently cause financial hardship.
Related Content: These 5 Methods Can Solve Most Tax Problems
How to Release a Wage Garnishment or IRS Bank Levy
The most effective way to release a wage garnishment or IRS bank levy is to be proactive and take immediate action. Tax issues do not resolve themselves, so you need to approach your financial problems head on. This will help you avoid additional penalties and fees and might allow you to avoid these aggressive collection tactics altogether. Once these funds are gone, they’re nearly impossible to retrieve, so you need to act fast.
You have 30 days to file an appeal from the date listed on the left-hand side of your Notice of Intent to Levy. If you fail to do so, your bank account is subject to levy and your wages could be garnished by the IRS. However, filing the appeal places the levy on hold throughout the duration of the process while also buying you time to resolve your tax liability or come to an arrangement with the IRS.
To file your appeal, you must complete and submit IRS Form 12153, which is the Request for a Collection Due Process or Equivalent Hearing. Conversely, you can request the CAP procedure, also known as the Collection Appeals Program, using IRS Form 9423.
You might also be able to resolve the issue by dealing with the IRS Collections Department directly, but you should still file an appeal to prevent the IRS from levying your account or garnishing your wages. If you’re able to come to an agreement with the IRS prior to your appeal hearing, you can always cancel.
When to Consider Filing a Tax Levy or Wage Garnishment Appeal
The IRS oversees thousands of appeals every year — many of which are successful for the taxpayer. However, in order to have your levy or garnishment removed, you must prove one or more of the following criteria.
- You’ve already paid your taxes, and the IRS made an error.
- You’ve already entered an Installment Agreement or Offer in Compromise.
- The IRS made a procedural error, failing to follow the required 3-step process:
- Assessment and payment demand
- Failure of the taxpayer to pay or enter an approved arrangement
- Notice of Intent to Levy and 30 days to file an appeal
- You’re filing or have already filed bankruptcy.
- Your spouse (or ex-spouse) is exclusively responsible for the tax liability (this is known as Innocent Spouse Relief).
- The statute of limitations for the IRS to collect your tax debt has expired — usually 10 years following the filing year in question.
Exceptions to the 30-Day Levy Notice
There are certain extreme situations in which the IRS is not required to provide the standard 30-day notice before levying your bank account or garnishing your wages.
- State Tax Refund Levy: State tax refunds can be levied or garnished at any time.
- Jeopardy Levy: When the IRS feels the taxpayer might intentionally empty their account or hide their funds, they can levy or garnish your bank account.
- Disqualified Employment Tax Levy: If the taxpayer has requested an appeal within the last two years for payroll of employment taxes, the IRS can levy or garnish the bank account without notice.
- Federal Contractors: The IRS can levy or garnish a federal contractor’s account at any time and then notify them after the fact.
Contact S.H. Block for Help With All Your Tax Needs
At S.H. Block Tax Services, we have the skill and experience you need to understand your tax liability and potentially avoid a bank levy or wage garnishment through a number of proven legal approaches.
The sooner you contact us after becoming aware of the problem, the more we can do to help you—so please reach out today. When you do, we will immediately begin acting on your behalf in all IRS communications and file an appeal to give us time to seek alternate solutions while we delve into the specifics of your unique situation.
To learn more or schedule a free consultation, please call (888) 884-8686 or complete this brief form today.
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.