IRS Levy

• When you have a past-due federal tax bill and ignore attempts by the Internal Revenue Service to collect the debt, you face the risk of a bank levy. The IRS has the authority to levy a joint checking account no matter who is the responsible party. Once this happens, there are few ways to release the levy other than paying your tax bill. However, if you have other accounts that are in your name only, the IRS will most likely levy those first. When it comes to joint ownership accounts, section 5.11.2.1.1 of the Internal Revenue Manual recommends that agents look for other sources to levy before turning to the joint account.
  
  

Judgment Levy

• If a creditor or private party sues you for nonpayment of a debt and wins, one option for enforcing the resulting judgment is a levy on your joint checking account. In this case, it makes a difference whose name is also on the account. If the joint checking account is with your spouse, the entire account is subject to levy. If the joint checking account is with someone other than your spouse, the creditor can only levy a portion of the funds in the account. For example, if you have a joint checking account with a live-in partner, the creditor can only levy 50 percent of the nonexempt funds in the account. If your bank turns over the entire account, the joint partner can file an objection.
  
  

Exemptions

• The IRS can levy funds in your joint checking account that come from almost anywhere. This includes deposits from sources such as wages, commissions, retirement accounts, dividends and rental income. Creditors other than the IRS have restrictions on what they can levy. Money that is exempt from levy includes 75 percent of your wages, money that comes from the government such as Social Security or unemployment, money from a retirement plan and insurance policy proceeds.
  
  

Objections

• Your spouse can object to an IRS levy on a joint account by filing an appeal as an innocent spouse. This is a complicated process and if you are considering filing an innocent spouse appeal, it is a good idea to consult with a tax professional for help and advice. If you want to object to a judgment levy, contact the clerk of court office for the city or town in which you live for instructions on how to file an objection. In either case, act quickly if you want a chance of getting some of your money back.