Bank Levy

What is a Notice of Intent to Levy?

A Notice of Intent to Levy or CP90 is the last of several notices that inform a taxpayer that the IRS will start to seize assets. The Notice of Intent to Levy is only sent if you have failed to make outstanding payments on your taxes. If you did not respond appropriately to the other notices, the Final Notice of Intent to Levy declares that within thirty days of the posted date on the letter, the IRS will levy your wages, bank account, or other available assets.

An IRS bank account levy is when the IRS seizes money from your bank account to cover your tax debt. If the IRS has sent repeated notices demanding payment and you haven’t paid or tried to set up other arrangements, the IRS may issue a bank levy. When this happens, the bank freezes access to your account and eventually sends the funds to the IRS.  The IRS cannot freeze and seize monies in your bank account without proper notice. Once your bank receives a notice of seizure of your funds, your bank has an obligation to hold the money for at least 21 days before paying it to the IRS. You must contact the IRS immediately to negotiate either a partial or a full release of your funds. This is another tactic by the IRS to get the taxpayers attention. 

Under federal law, the IRS must release your bank account if:

• You pay the tax, penalty, and interest you owe.
• You discover that the time for collection (the statute of limitations) ended before the levy was served.
• You provide documentation proving that releasing the levy will help them collect the tax.
• You have an installment agreement, or enter into one, unless the agreement says the levy does not have to be released.
• You determine that the levy is creating a significant economic hardship for you.
• The fair market value of the property exceeds such liability and release of the levy on a part of such property could be made without hindering the collection of such liability.

The IRS may consider releasing your funds when:

• They levy before they send you the two required notices, or before your time for responding to them has passed (10 days for the Notice and Demand, 30 days for the Notice of Intent to Levy, and the Notice of Right to a Hearing).
• They did not follow their own procedures.
• They agree to let you pay in installments, but they still levy, and the agreement does not say that they can do so.
• Returning the property will help you pay your taxes.
• Returning the property is in your best interest and the government's best interest.

Some ways to stop an IRS Levy:

1. Request a Collection Due Process Hearing - This must be done within 30 days from your "Notice of Intent to Levy" letter. You must exercise extreme caution when making this request, however. You will now be on (what may appear to be) an accelerated time frame. You also must be prepared to present a compelling case in a short amount of time. 
2. Enter Into an Installment Agreement - To get the levy released, you’ll still need to be in compliance. You’ll also like have to have your financials in some sort of order. The IRS may request a good deal of financial information from you. If it’s not ready, your levy won't be removed until it is.
3. Ask For An Offer In Compromise -For the past several years, the amount of OIC’s being rejected are on the decline. Still, more than 50 percent of all OIC’s are rejected, and they must be filed with non-refundable fees. This can be a very expensive stop-gap measure.
4. Request Collections Appeal Program - This is a good way and a quick fix to stop levies. But you still must be prepared to offer the IRS an immediate solution. There are a couple cons to this action as well, most notably, no judicial review is possible if you choose this route.