What is a Bank Levy?
A bank levy is a very serious incident and one that can cause great distress for you financially. This involves the IRS freezing your bank account. They can take everything that is in it. They don’t care if you have $5, $500, or $5,000. They don’t have to tell you that they are going to do it either.
The information for the bank levy goes right to the financial institution. As a result, you may write checks and then you don’t have any money to cover them. You may need to make a cash withdrawal and find out that you can’t access any of the money you thought you had in that account.
Is a Bank Levy Legal?
It may seem that a bank levy isn’t legal, but it is. This is because by law you owe the IRS that money. As long as they can prove you do indeed owe them that money, then the bank levy is legal. If you have documentation that you don’t owe them anything or that other arrangements were made then it isn’t going to be legal.
The IRS is very careful about it though. They don’t put out a bank levy unless they have no other choice. They have also double checked the account to be sure they are in the right before they go forward with it.
What Funds can they Take?
Child support funds are about the only monies that they can’t take out of your bank account. However, they can initially with a levy. Then you have to contest it and you have to be able to prove that a given amount of it is from child support. Funds you get from work, disability, and retirement can all be part of the levy.
Keep in mind though that the paperwork processing can be a nightmare. It can take you several months to get this all worked out. Many people place funds from all sources into a bank account so that is why it is hard. You may want to consider a separate account for the child support funds to go into if you fear that a bank levy could occur.
They will Find your Money
Changing bank accounts or bank locations isn’t the answer either. With the world of electronics out there today, it isn’t hard for them to be located. You don’t want to have a bank levy chasing you around as you will always be looking over your shoulder. That stress and anxiety isn’t going to allow you to lead a good quality of life.
Avoid a Bank Levy
Never ignore any types of contact you get from the IRS. If you can’t pay what you owe them, talk to them about options. It can be embarrassing and stressful to do so, but take the time to tell them what is going on with you. This will help you trying to work out other arrangements. It is possible to work out a lower amount to owe and payments you can afford.
They won’t put a IRS tax bank levy out there if you have arrangements and you are making good on them. Be realistic though in terms of the new arrangements. If you know you can’t stick to them then don’t agree. You will just be setting yourself up for failure.
If you are worried about a bank levy in your future then contact us. We can go over your options and help you work things out with the IRS. If you have experienced a bank levy, they can continue it until the balance is paid in full. However, we can assist you with working out arrangements so that the levy will end.