IRS Levies

• An IRS levy seizes your property or money and then applies the funds to your tax debt. When the funds or property levied cover your total tax liability and any penalties or interest accrued, your tax debt is cleared. When the levied funds do not meet the debt owed, the IRS may seize additional property, obtain a lien on your home or garnish your wages in an effort to completely cover the tax liability.
  
  

IRS Levy Requirements

• The IRS provides taxpayers with an unpaid tax liability several opportunities to pay off a tax debt or arrange payment before bank accounts are garnished. When the IRS determines that you owe the Department of the Treasury funds, the department sends you a Notice and Demand for Payment. If you ignore this notice and refuse to pay the tax, the IRS sends another notice known as a Final Notice of Intent to Levy and Notice of Your Right to a Hearing. The IRS ships this notice via certified or registered mail. Both services require your signature on a dated return receipt card that is mailed back to the IRS. You have 30 days to respond to this notice before the levy occurs.
  
  

The Levy Process

• When the IRS serves a levy based on your lack of response to notices sent, your bank holds your funds for 21 days unless you waive the waiting period. This holding period allows time for the ownership of the levied bank account to be established prior to funds being removed. Additional time can be granted when ownership of the account is not proven within the initial 21-day period. Otherwise, on the first business day after the holding period, your bank sends your funds to the IRS. The bank will send the entire tax liability plus funds to cover accumulated interest.
  
  

Avoiding a Levy

• The best way to avoid having a levy placed on your checking or savings accounts is to pay your total income tax owed on time every year. However, should your income tax liability ever exceed your ability to pay, the IRS offers multiple options for repayment. Taxpayers who owe less than $25,000 can fill out an Online Payment Agreement to set up a payment plan while taxpayers owing over $25,000 must file Form 433F, Collection Information Statement and receive IRS approval for the requested payment plan.