Don't let your tax debt become a bank levy. The IRS does give a warning that they intend to levy your account. It will come in the form of a certified letter from the IRS and lets you know that the IRS will levy your bank account and withdraw funds to pay your debt.
If you hadn't setup something to take care of your tax debt already, then you have to act now! Once you receive that "intent to levy" letter your chances of preventing an IRS bank levy goes down every day that you don't act.
Get a short stay of execution. You can submit a form 12153 to request a Collection Due Process Hearing. This will give you 30 days from the time you got the intent to levy letter to negotiate with the IRS for an alternate method to pay on your debt. This can include such payment plans as: an Installment agreement, an Offer in Compromise, or a Penalty Abatement for your IRS tax debt. During the time you're negotiating with the IRS they will temporarily suspend any levy activity.
Once the IRS levies your bank account you still have 21 days to work something out before the money is taken. However during the 21 days after the IRS has levied you bank account you can't access your funds, and you chances of keeping the IRS from emptying your account is growing very slim indeed.
Once the IRS has seized your account you have to act quickly. If you had already tried to negotiate and didn't get anywhere with the Collection Due Process Hearing, the IRS isn't going to work with you during the 21 day period. You will have to get the services of a tax professional [http://www.articledashboard.com/Article/Who-is-Qualified-to-Work-on-Your-Federal-Income-Taxes-/426871], such as a tax attorney or CPA to work on your case, and negotiate with the IRS to get the lien removed.
Prove to the IRS that levying your bank account will cause you undue hardship. The IRS is not without pity. If you can prove that you can't pay basic expenses, and you living situation would be jeopardized by the 21 day hold period, you can get the IRS to not take the basic amount of money you live on out of your account. The burden of proof is on you when dealing with the IRS, and you will have to submit to a thorough financial investigation for the IRS to determine what your basic living expenses would be. You should know that this is a last ditch effort, and the IRS will still levy some, but not all of your money from your bank account.
Don't let this happen to you. This isn't so much a step as it is my final warning. If you put off dealing with your debt, and ignore the above solutions then the IRS will levy your account for 21 days, and during that time you will not be able to access any of your money. Once the 21 days are up your bank must send the requested funds to the IRS. After the 21 days the bank levy is lifted, and the IRS has taken as much as they can from your account.
Don't let the IRS scare you and don't make the mistake of thinking the IRS only makes idle threats. If you do receive an "intent to levy" letter then you must deal with it immediately.
Now you have the smoking gun...Use it!
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