Can the IRS Seize My Bank Account Without Notice?

The Internal Revenue Service (IRS) possesses the authority to seize your bank account to satisfy outstanding tax debts through a process known as a bank levy. This levy empowers the IRS to seize funds directly from your account, potentially leaving you with insufficient funds to cover essential expenses. However, the IRS is generally required to provide advance notice before imposing a bank levy, affording you an opportunity to address the situation and potentially prevent the seizure of your funds.

Exceptions to the Notice Requirement

In certain limited circumstances, the IRS may proceed with a bank levy without providing prior notice. These exceptions include:

• Jeopardy Levy: The IRS may impose a jeopardy levy if it reasonably believes that you are attempting to evade or defeat the assessment or collection of taxes by concealing assets or transferring funds overseas. In such cases, the IRS may levy your bank account without notice to prevent you from dissipating your assets.

• Bankruptcy or Receivership: If you have filed for bankruptcy or a receiver has been appointed to manage your assets, the IRS may levy your bank account without notice to protect its interests in the distribution of your assets.

Procedures for Issuing a Bank Levy

When the IRS intends to levy your bank account, it will typically follow these steps:

1. Notice of Intent to Levy: The IRS will send you a Notice of Intent to Levy, informing you of its intention to seize your bank account. This notice will provide details about the amount of the tax debt, the date the levy will take effect, and your rights to challenge the levy.

2. Waiting Period: After sending the Notice of Intent to Levy, the IRS must wait a minimum of 30 days before proceeding with the levy. During this period, you have the right to request a Collection Due Process (CDP) hearing to contest the levy.

3. Bank Levy: If you do not request a CDP hearing or if your request is denied, the IRS will issue a bank levy to your bank. The bank is then required to freeze the funds in your account and send them to the IRS.

Options for Preventing or Releasing a Bank Levy

If you receive a Notice of Intent to Levy, you have several options to prevent or release the levy:

• Pay the Tax Debt: Paying the full amount of the tax debt will prevent the IRS from proceeding with the levy.

• Request a CDP Hearing: You can request a CDP hearing to challenge the levy. At the hearing, you can present evidence to show that the levy is incorrect, that you cannot afford to pay the tax debt, or that the levy will cause undue hardship.

• Negotiate an Installment Agreement: You can negotiate an installment agreement with the IRS to pay off the tax debt over time. This will prevent the IRS from levying your bank account while you are making payments under the agreement.

• Offer in Compromise: You may be eligible for an Offer in Compromise, which allows you to settle your tax debt for less than the full amount owed. If your offer is accepted, the IRS will release the levy on your bank account.

While the IRS generally provides advance notice before imposing a bank levy, it may proceed without notice in certain exceptional circumstances. If you receive a Notice of Intent to Levy, it is crucial to act promptly to protect your assets. By understanding your rights and exploring the available options, you can potentially prevent or release a bank levy and avoid the seizure of your funds.