Bank Levies
When the levy is on a bank account, the Internal Revenue Code (IRC) provides a 21-day waiting period for complying with the levy. The waiting period is intended to allow you time to contact the IRS and arrange to pay the tax or notify the IRS of errors in the levy.
Generally, IRS levies are delivered via the mail. The date and time of delivery of the levy is the time when the levy is considered to have been made. In the case of a bank levy, funds in the account are frozen as of the date and time the levy is received. Normally, the levy does not affect funds you add to your bank account after the date of the levy.
How to get an IRS Levy Released
The IRS can release a levy if it determines that the levy is causing an immediate economic hardship. If the IRS denies your request to release the levy, you may appeal this decision. You may appeal before or after the IRS places a levy on your wages, bank account, or other property. After the levy proceeds have been sent to the IRS, you may file a claim to have them returned to you. You may also appeal the denial by the IRS of your request to have levied property returned to you. For a full explanation of your appeal rights, see Publication 1660, Collection Appeal Rights (PDF).
The IRS is required to release a levy or a seizure if it determines any of the following:
- You paid the amount you owe,
- The period for collection ended prior to the levy being issued,
- Releasing the levy will help you pay your taxes,
- You enter into an Installment Agreement and the terms of the agreement don’t allow for the levy to continue,
- The levy creates an economic hardship, meaning the IRS has determined the levy prevents you from meeting basic, reasonable living expenses, or
- The value of the property is more than the amount owed and releasing the levy will not hinder our ability to collect the amount owed.
IMPORTANT: If the IRS levy’s a JOINT BANK ACCOUNT, they have to release the Levy if the tax owed is not yours and you have money in the account.
Please note: The release of a levy does not mean you don’t have to pay the balance due. You must still make arrangements with the IRS to resolve your tax debt or a levy may be reissued.
For more information, see Publication 594, The IRS Collection Process
What Happens After My Property is Seized and How Do I Get It Back?
What happens after my property is seized?
If the IRS seizes your house or other property, the IRS will sell your interest in the property and apply the proceeds (after the costs of the sale) to your tax debt. Prior to selling your property, the IRS will calculate a minimum bid price. The IRS will also provide you with a copy of the calculation and give you an opportunity to challenge the fair market value determination. The IRS will then provide you with the notice of sale and announce the pending sale to the public, usually through local newspapers or flyers posted in public places. After giving public notice, the IRS will generally wait at least 10 days before selling your property. Money from the sale pays for the cost of seizing and selling the property and, finally, your tax debt. If there’s money left over from the sale after paying off your tax debt, the IRS will tell you how to get a refund.
How do I get my seized property back?
Contact the IRS immediately to resolve your tax liability and request a seizure release. The IRS can also release the seizure if it determines that the seizure is causing an immediate economic hardship. If the IRS denies your request to release the seizure, you may appeal this decision. You may appeal before or after the IRS seizes and sells your vehicle(s), real estate, or other property. After the seizure proceeds have been sent to the IRS, you may file a claim to have them returned to you. You may also appeal the denial by the IRS of your request to have seized property returned to you. For a full explanation of your appeal rights, see Publication 1660, Collection Appeal Rights (PDF).
Please note: The release of a seizure does not mean you don’t have to pay the balance due. You must still arrange with the IRS to resolve your tax debt or a seizure may be reissued.
For more information, see Publication 594, The IRS Collection Process
Your best solution is to call the experts at Hutto & Associates to negotiate with the IRS on your behalf to solve your IRS Levy problems.