Saturday, October 5, 2013

What You Need To Do When the IRS Garnishes Your Bank Account



If you think that the money in the bank account is going to be safe from the IRS, then you are completely wrong. It is a nightmare situation – You’re at the ATM. To your great shock, you aren't able to withdraw the cash. Your balance shows negative. You rush to the bank only to find that your account is under IRS bank levy and you receive a copy of levy notice letter from them. You are totally shattered.

Do not think that you cannot come out of this levy. As a tax attorney, I can assure that for each and every tax problem, there is a solution. In-fact, there's no such thing as a hopeless tax case. The next few paragraphs will tell you how.



1. The Internal Revenue Service has enforced a levy but the cash in your account will not go immediately to the government.  The bank will freeze your money for a three week period from the date of levy after which only it will be transferred to the IRS. So within this time period, you need to do the negotiations with the IRS and request for the money to be returned to your bank-account. This is called as levy release.

2. The IRS could possibly ask various details such as your previous tax returns, the amount withheld from your salary for income tax and also your estimated tax payments. There are exceptions to the regular practices, so the IRS employee is not the last word.

3. You will need to complete a form which IRS uses to capture your financial situation. This form is referred to as Collection Information Statement and from this the IRS will know exactly how to garnish you in the future, including other bank accounts and the wages. So utmost care has to be taken about the information you are going to provide to the IRS.

4. In case your application is denied, you have the right to appeal against IRS enforcement actions. There are two main appeal processes- Collection Appeals Program or CAP and Collection Due Process. Most IRS actions related to tax collection can be appealed with the CAP process. Not only that, Collection Appeals Program provides taxpayer a higher success rate  when compared to other programs like Audit Appeals, Offer in Compromise and Collection Due Process. You know what, IRS publishes a rule book called Internal Revenue Manual (IRM) to guide their agents and it gets regularly updated by the federal government. But IRS employees has a hard time with this book since it is very complicated and many times, they miss to follow the rules exactly right during the tax collection process.  Here we use this effectively to win the CAP appeal by pinpointing the mistakes and the rules that was not followed by the IRS agents to the appeals officer.  When it is shown with supported documents, the appeal officer will reverse the IRS levy enforcement and your garnishment gets released.

5. You got a garnishment relief. However it doesn’t mean you can relax yourself forever since a levy release is often temporary. It is just a start of your representation. It's best to immediately begin work towards getting a permanent solution. Every cloud has a silver lining so it's time for you to analyze the choices available. To stop the bank levy permanently, settle your tax debts as soon as possible or take the alternate steps that is available to you. Otherwise, don' get surprised to see many more IRS garnishments on your hard earned money.


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