Owing the IRS back taxes can be terrifying and stressful. Sometimes you are left unsure about which steps to take and this hesitation often leads to no action being taken at all. When this happens, the IRS may not have the patience to wait and see if you will address your tax delinquency, and a tax levy may be in your future.
A tax levy is an administrative action that the IRS can take in which the agency seizes one of your assets. A levy can be implemented on a variety of assets, including your bank accounts. When the IRS issues a bank levy, your bank is legally obligated to freeze your accounts and deny you access to your money. The IRS is then free to deduct what you owe from your savings.
Fortunately, the IRS and your bank have to follow a certain process before a bank levy reaches full effect. If you owe back taxes and have reason to suspect that the IRS will impose a bank levy, here are a few steps you should take:
Before the IRS can freeze your bank accounts, they are legally bound to send you a letter informing you of their plans to levy your accounts. After the letter is delivered, you only have a few days to respond and try to negotiate with the IRS before the levy is imposed. Make sure that you can easily be found by the IRS. Once they send the letter, the clock has already started ticking.
Call a Tax Relief Expert
The Internal Revenue Code (IRC) is complex, yet once you contact the IRS to settle or negotiate the amount you owe, they will expect you to perfectly know the ins and outs of the IRC. Naturally, this isn’t practical for many people. It is highly advised that you speak to a tax relief expert before you call the IRS. A professional can help assess your situation, as well as negotiate with the IRS on your behalf.
Follow Through on the Resolution
More often than not, the IRS is willing to negotiate with you on what you owe. Sometimes, they may agree to smaller monthly payments until you pay off your entire debt. In other cases, they may agree to significantly reduce what you owe and expect the amount to be paid in full. Whatever agreement you reach with the IRS, make sure that you follow through; otherwise, you may find yourself in even hotter water.