If you have an outstanding tax debt and the IRS has garnished your bank account, the experienced attorneys at Wiggam Law can help you negotiate with the IRS to release the levy and assess options for paying off your tax liability.
If you have been ignoring multiple bills and notices from the IRS, you may be subject to the agency placing a levy on your bank account. This is also known as garnishing your bank account.
What Is Garnishment?
A levy or garnishment is a legal seizure of your assets, in this case your bank account, to satisfy your tax debt. Unlike a lien, which is a claim against your property to satisfy your tax debt should the property be sold, a levy signifies the actual taking of your property by the IRS.
Before the IRS levies or garnishes your assets, these four events have to have usually occurred:
· The IRS assessed you taxes due and sent one or more Notice and Demand for Payment.
· You neglected or failed to pay your tax bill.
· At least 30 days prior to issuing the levy, the IRS sent you a Final Notice of Intent to Levy and Notice of Your Right to a Hearing.
· The agency notified you that it may contact third parties regarding collection of your tax debt.
If following these four events you do not pay your tax debt or apply for an installment agreement, the IRS may move forward with bank account garnishment. IRS levies are generally delivered via mail. Funds in your bank account are frozen as of the date and time the levy is received. If you add funds to your account after the date of the garnishment, these are usually not affected by the levy.
How Does a Creditor Find Your Bank Account
Because you owe the IRS money, it is a creditor. But unlike any of your other creditors, the IRS has an incredible amount of information on you that allows it to easily find your bank accounts.
If you have received more than $10 in interest from a bank account, your bank has had to report it to the IRS on a Form 1099. This form includes your bank account number, your name, address, and Social Security number.
If you have ever requested direct deposit of an IRS refund, the agency has that bank account information. If you paid a prior tax bill by check, the IRS likely has a record of that checking account number. Using your Social Security number, which is required to open a bank account, the IRS can easily find other bank accounts in your name.
What Funds Are Exempt From Garnishment
While certain payments and assets, such as disability payments and unemployment benefits, are exempt from garnishment, bank account balances are not. When the IRS issues a levy on or garnishment of your bank account, it usually puts a 21-day hold on the funds before withdrawing them. This waiting period is intended to allow you time to pay your taxes or contact the IRS regarding either payment arrangements or any errors in the levy. If you have taken neither action at the end of the 21-day freeze, the bank must turn over your funds to the IRS.
What to Do When Your Bank Account Is Garnished
If the IRS has placed a levy on your bank account, you can take the following steps to have the garnishment released before the funds transfer over to the IRS:
· Pay your tax debt
· Enter into an installment agreement
· Argue that the bank account levy creates an economic hardship, meaning you cannot meet your basic living expenses
If you have received a Final Notice of Intent to Levy your bank account, it’s best to contact a tax attorney right away to discuss your options for fighting the levy or entering a payment agreement. At Wiggam Law, our team of experienced tax lawyers can help you evaluate all your options and represent you. Give us a call today at (404) 233-9800 to get started.