An IRS bank levy can be a difficult situation to handle for most taxpayers. To stop IRS collection actions this late in the collection process can be difficult but it can be done. It is important to act quickly because you will not have much time once you realize you have been hit with a bank levy. You will only be notified of the IRS's intent to levy your assets and you will not know which form of levy they will pursue. You will not even be notified by your bank that you have received and IRS bank levy, you will likely find out by trying to withdrawal funds and you find your account is frozen. When you are attempting to stop an IRS bank levy you should follow these steps.
First see if you have the right to appeal the bank levy. Sometimes the IRS messes up and does not follow the correct process in issuing levies. For instance the levy should not have been issued if you paid the debt already, you entered into an installment agreement, you filed for an offer in compromise, you are in bankruptcy, the IRS made a procedural error, you were not assessed with a tax liability, the statute of limitations has expired on the back taxes, or you want to make spousal defenses on the levy.
If you feel you can appeal the levy it is important to do so as soon as possible and the appeal will stop collection actions until a determination has been made.
If you cannot appeal the levy, see if you can come up with the funds to pay the IRS in full. Once the IRS is paid in full, the bank levy will be stopped. In some situations it could be a good idea to borrow from family and friends, sell some assets or refinance your home to come up with the funds to pay off the taxes owed.
If you can't get the funds to pay in full then see if you can apply for an installment agreement. With an installment agreement you will be able to pay back the taxes owed in monthly increments until the total amount of taxes is paid if, as long as it is done so within 3 years. Once your installment agreement is accepted then your IRS bank levy will be stopped.
If you can't qualify for an installment agreement then consider filing for an offer in compromise. An offer in compromise is a tax relief program offered to those taxpayers that are in bad financial situations and there is doubt as to collectability on their taxes owed. If you can't qualify for an installment agreement it is a possibility you will qualify for an offer in compromise.
If all else above fails then it may be possible to get declared uncollectible. To do this you will have to prove that the levy will cause financial hardship. Once it is proven that the levy will cause financial hardship then the IRS will temporarily stop collections and they will look at your financial situation at some point in the future to see if it has improved enough for them to begin collections again.
IRS bank levies move quickly and sometimes it doesn't give the taxpayer enough time to fully assess their financial situation and come up with the best plan of action. For that reason it is highly suggested that a taxpayer in this situation should contact a qualified tax professional to help with the problem. A tax professional can quickly analyze your financial situation and come up with the best plan of action to stop the bank levy.
If you need IRS bank levy help, request a free consultation from one of our tax professionals and they can quickly analyze your financial situation and come up with the best plan of action to stop the levy.