If you’ve received a notice from the government that it intends to levy your bank accounts, you probably had at least a moment of panic, and questions about how you will pay the bills and feed your family. But while facing a government levy is a serious situation, the United States Constitution forbids the government from depriving its citizens of “life, liberty, or property, without due process of law.” That means before the government can simply reach into your bank account and take your money, you have the right to challenge it’s right to do so. Below is some important information for anyone facing government bank levies.
IRS Levies Begin with a Series of Notices
Before the IRS can levy your accounts, it first sends a series of five notices over a period of several months. You’ll receive a notice that you have a balance due, followed by a reminder that you have a balance due. You’ll then receive a second notice, and then a final notice. Each of these first four notices is essentially a warning, but legally has little significance. The fifth notice you receive should be the final notice of the intent to levy your accounts, as well as your right to a hearing. This notice is very different because it gives the IRS significant legal rights.
An IRS Notice of Intent to Levy Begins a 30-Day Clock
After sending the fifth and final notice of intent to levy your accounts, the IRS may not begin to levy your accounts for 30 days. During that time, you have the right to challenge the levy by requesting an administrative hearing with an IRS officer, sometimes known as a Collections Due Process or CDP appeal. During the CDP appeal, you will have the opportunity to negotiate a resolution. This typically involves a repayment plan, but in some cases you may be eligible for an “offer in compromise” (a settlement where you pay less than the IRS claims you owe) or to be placed on uncollectable status, meaning you are temporarily financially unable to pay but intend to pay the full amount in the future.
The State of California can (and will!) also levy your accounts
Like the IRS, California’s Franchise Tax Board (FTB) has the authority to levy the accounts of delinquent taxpayers, and the FTB has a reputation for being aggressive about doing so. In addition, the FTB is responsible for levying accounts on behalf of the Department of Motor Vehicles for overdue vehicle registration payments. But like the IRS, California also allows taxpayers the opportunity to resolve delinquencies through payment plans or temporary uncollectable status.
If you’ve received a notification that the IRS or FTB intends to levy your accounts, you have rights but it’s important to act quickly to protect them. The timelines established by law don’t allow much time to file appeals. Our firm is a team of tax experts with specialists focusing on both state and federal tax issues, and we’ve helped hundreds of clients successfully resolve their tax problems. If you need to speak with a tax attorney, contact us today to schedule a consultation.
Posted in: Bank Levies