If you find yourself in a situation where you owe the IRS unpaid taxes, then might be wondering can the IRS take money out of my bank account? Under certain circumstances, the IRS can indeed take money straight out of your bank account. But how exactly does this work?
In this article, we will go over the circumstances resulting in the IRS taking money straight out of your bank account and what you can do to avoid this.
Can the IRS Take Money Out Of My Bank Account?
Yes, the IRS can take money out of your bank account to collect any unpaid taxes. The IRS only does this under extreme circumstances and as a last resort. Before they do this, they will first notify you of any unpaid taxes and request immediate payment. If that is not done, the IRS will perform a bank Levy and collect any unpaid taxes.
This notice is called the Final notice of intent to Levy and notice of your rights to a hearing. At this point, you officially have 30 days to resolve your debt with the IRS before they start the process of seizing your money in your bank account.
The IRS typically traces details of your bank account from previous tax returns. They might also have details from any accounts that are linked to your social security number. Simply put, you can’t hide from the IRS.
What is an IRS bank levy?
A levy is the seizure of property or assets by the IRS to fulfill any unpaid taxes. Based on the definition, not only can they seize cash that is in your bank account, but they also have the legal right to seize any of your assets such as homes and cars. They will sell these assets to fulfill any unpaid tax debts you might have.
Seizing your physical assets is the last resort as the IRS typically garnish your wages or levy your bank accounts first. It’s much more effective and faster to just cease your cash as opposed to the tedious process of selling your assets.
What can you do to prevent a bank levy?
Once you receive an IRS notice about a bank Levy, you should do whatever is necessary to pay back the tax debts that you may have. You typically have 30 days from receiving the levy notice to do so, unless specified on the levy itself. Your options at this point are typically very limited.
If the IRS freezes your bank accounts, then you will have to prove to the IRS that the levy will have put you in financial hardship. You can either contact the IRS directly or work with a tax resolution specialist best can help you get the levies lifted.
Lastly, If the IRS has made a mistake, then you can make a claim for reimbursement. As soon as you find out about the mistake, you need to contact the IRS immediately on the levy notice you would have received. Make sure you have all the details proving the error before making the call.
What assets can the IRS legally seize?
Other than levying your bank accounts, the IRS can also legally seize any assets that you may own. Anything that can be resoled for cash can be seized. Here are a few examples:
- Cars and any kind of vehicle
- Primary Home
- Vacation or Investment Homes
- Social Security benefits
- Retirement Accounts
Once your assets are seized by the IRS, it is more than likely impossible to ever get them back. At this point, the IRS will have believed that you have made no efforts to resolve the unpaid taxes. They will sell your assets as quickly as possible to recoup their unpaid taxes.
What about payment plans to release the levy?
If the IRS is going to or has already sent you a levy notice, then you and the IRS will need to come up with a resolution. If you cannot afford to pay the tax debt in full, the IRS also offers different payment plans. Depending on your situation, you can either spread out the payments in installments or postpone the payment until a later date.
Doing nothing is not going to help. You absolutely have to contact the IRS and figure out the best way you can come up with the resolution and that which you can afford.
The IRS and taxes are not only intimidating but scary to deal with. Life happens, and when it does, you sometimes can’t keep up with your taxes. If that’s the case, you want to be proactive instead of reactive. Don’t wait for the IRS to send you a levy notice.
Instead, you want to contact the IRS directly to set up some kind of payment plan to repay your taxes. You don’t want your bank accounts Frozen or for them to start seizing your assets.
In the comments below, feel free to share your experience with the IRS, and if you are currently going through this, good luck!