By: Timothy S. Hart | 30th of October 2012
When your debt situation becomes serious, the IRS has the fatal option of enforcing a levy into your bank account. This is a financial judgement where the IRS or a creditor can force a debt repayment plan by extracting your bank funds automatically. This typically happens when the debt is hugely significant or even delinquent. For your protection, there are ways to remove or even stop this IRS levy.
A bank levy is typically compared to a silent assassin because it strikes fast and it strikes hard. Although the IRS provides a warning that they will enforce a levy in your account, the time to act is relatively short. In no time, the IRS can move in to withdraw funds from your bank to pay your debts.
When the IRS is successful in enforcing a levy, your accounts will be frozen until such time when your debts are paid. Afterwards, the money in your bank will be directly funneled to the IRS. Obviously, this can be a very stressful and problematic situation if you don’t work to end this levy.
Removal of IRS Levy
- Your initial reaction should be to identify the source of the levy and to make sure that your account is indeed overdue. If this was a mistake, you can also file for lost funds. Thoroughly review your financial paperwork.
- Immediately contact the IRS to negotiate or settle your debts through other more manageable means. A flexible payment plan may be there for the taking and is more convenient than having an IRS levy your bank account.
- Filing bankruptcy may be bad for your financial health but it is a guaranteed way of removing the levy in your bank account. There will be a bankruptcy judge who will assess your assets to come up with a manageable repayment plan. Although this move is drastic, this offers real protection against indefinite debt collection.
Options to Offset an IRS Levy
- Payment plan . It all boils down to cash payments for the IRS and if you can negotiate a consistent monthly payment for your debt, then the IRS can consider taking down the levy.
- Debt settlement . To try to end the stressful financial nightmare that an IRS levy can conjure, it is best to end it in one swift payment with the help of debt settlement. With the guidance of a tax professional, you can negotiate an amount lesser than your actual debt to finally settle your balance.
- Hardship plan. This is a more direct approach to solving your pending financial crisis by addressing a letter to the IRS. This is an appeal to their sympathy by stating that a bank levy will make life difficult for you to meet the basic needs of living.
Immediate Response to Letter of Levy Intent
When the IRS sends letter after letter to you giving you a deadline to settle your debts, you are nearing the boiling point. Their last and most powerful weapon: the letter of intent to levy your bank account. Once you receive this letter you have about 21 days to respond.
For your immediate response, you can submit a form 12153 in order to request for a Collection Due Process Hearing. This will give you a leeway of about thirty days to settle with IRS an alternative method of paying your debts. While you are negotiating with them, IRS will stop any collection activity. The following are options you can pursue to help you avoid a bank levy:
If the Collection Due Process Hearing does not work out for you, your bank account will be subjected to a bank levy. You will not be able to access your funds. To counter this, you need to seek the help of a attorney who understands tax laws to negotiate with the IRS to have your lien removed.