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Tax Services: IRS Bank Levy
What is an IRS Bank Levy? Bank levies, used for a Tax Levy, are the actual action taken by the IRS to collect taxes. For example, the IRS can issue a bank levy to obtain your cash in savings and checking accounts.
When the IRS places a tax levy on your bank account, the bank has a legal obligation to turn over all monies in your accounts. It doesn't matter where the money came from or whether or not it is even your money. The fact that you have it in your bank account is all that is needed. Most people have direct deposit for their pensions, Social Security, child support, etc., but the IRS does not check the records to find out the source of the funds. Once the money is deposited in your account, it loses its identity.
Tax Levies usually are the result of poor or no communication between the taxpayer and the IRS.
IRS Bank Levies
- When the IRS levies a bank account, the bank levy is only for the particular day the levy is received by the bank.
- The bank is required to remove whatever amount is available in your account that day (up to the amount of the IRS levy) and send it to the IRS in 21 days unless notified otherwise by the IRS.
- This type of IRS bank levy does not effect any future deposits made into your bank account unless the IRS issues another Bank Account Tax Levy.
Wage Levy / Garnishment
- Wage levies are filed with your employer and remain in effect until the IRS notifies the employer that the wage levy has been released.
Most wage levies take so much money from the taxpayer's paycheck, also known as a wage garnishment, that the taxpayer doesn't have enough money to live on.