One of the dangers of having unresolved state or federal tax debts is that the debtors have exposed themselves to the crippling possibility of a bank levy.
A bank levy is when the IRS or state taxing authority removes the amount of unpaid federal or state tax debt from the debtor’s bank accounts: Without obtaining a court order, the state and federal government can act quickly to seize funds from any account to which the debtor has access, including checking, savings, CDs, and money market accounts. If the debtor’s accounts are insufficient to satisfy the entire debt, future deposits will also be seized until the entire amount is paid.
The bank levy process
Once a levy notification is sent to the debtor’s bank, there is very little time to act before the debtor’s accounts are emptied and, once seized, it is extremely difficult to get the funds back from the government.
In cases of unpaid federal taxes, once the levy notification is sent to the bank, the debtor only has 21 days to resolve the tax debt before the funds are released to the IRS. States, on the other hand, are even more aggressive at collecting unpaid tax debt, with some only giving the debtor 72 hours to resolve his or her debt before the money is given to the state taxing authority.
How a levy on your bank account can affect your finances
Bank levies can be devastating to a tax debtor by preventing access to one’s hard-earned paycheck and depleting life savings. A bank levy can easily turn a family who is living paycheck-to-paycheck into one in dire circumstances. Once the levy is initiated, debtors are unable to access their direct deposit paycheck, savings, or other funds, causing them to fall behind on other bills and thus making future bank levies inevitable.
Because of the serious nature of a bank levy, the severe financial repercussions, and the speed with which the funds are seized, it is important to obtain the help of an experienced tax professional as quickly as possible, either at the beginning of the process or before a levy is started. An experienced tax professional can assess your tax situation, find the best resolution to alleviating future bank levies, and negotiate with the IRS and state taxing authorities on your behalf.
Key Tax Group can protect your hard-earned money with an affordable tax resolution
At Key Tax Group, we understand that you need access to your hard-earned money to support yourself and your family. That’s why we work quickly to establish an affordable resolution to protect our clients’ paychecks and life savings. To receive your free initial consultation with the tax law specialists at Key Tax Group, contact our office today.