IRS Lien and IRS Levy – Seizure of Bank Accounts

The IRS can seize your bank accounts by, first, filing and recording a Notice of Federal Tax Lien , then second, serving a Notice of Intent To Levy to the bank where your money resides. You would have received notice that this was about to happen in most cases. When you receive any Notice of Federal Tax Lien, act promptly. Don’t ignore these notices. There are several ways legally to beat the IRS both before and after receipt of a Notice of Federal Tax Lien or a Notice of Intent to Levy.

The scenario happens like this: the IRS sends Notice of Intent To Levy to your bank and your bank account is effectively seized as of that moment.  Only the money in the account as of that moment can be seized. Deposits that come in after the Notice of Intent To Levy are not subject to seizure; however, don’t expect the IRS or your bank to protect your money – you have to do it yourself, or, better, through your tax attorney.

You need to get legal help immediately. The bank is obligated to pay over the levied amount within 21 days of receipt of the Notice of Intent To Levy.

There are strategies that can be developed BEFORE the Notice of Intent To Levy:

1.      Be wishful that it doesn’t happen (ha ha ! – nevertheless, a common mindset);

2.      Negotiate with the Revenue Officer (“RO”) assigned to the case – unfortunately, talks with revenue officers by taxpayers in trouble usually results in disastrous consequences such as disclosing where seizable assets can be located;

3.      File bankruptcy;

4.      Dedicate the funds to priority business payments within strict guidelines (call me first);

5.      Transfer the funds to an assignee or other nominee within strict guidelines under State law (call me first).

There are strategies that can be developed AFTER the Notice of Intent To Levy:

1.      Apply for a Release of Federal Tax Lien;

2.      Apply for a Certificate of Discharge of the Federal Tax Lien;

3.      Apply for a Certificate of Subordination of the Federal Tax Lien;

4.      File lawsuit against the USA for wrongful levy.

While determining the best business strategy during the pendency of the recorded Federal Tax Lien, you may appeal the Federal Tax Lien using, for example, the following grounds for appeal:

1.      taxes were paid;

2.      lien was filed during bankruptcy and subject to the automatic stay during bankruptcy;

3.      procedural error was made in an assessment;

4.      statute of limitations expired before lien filed;

5.      Tax Court filing or other filing was made regarding the assessed liability;

6.      spousal defenses may be available.

Strategic business thinkers prepare ahead of time when they can, and respond quickly when they are faced with a crisis. When the IRS letters and notices start coming in the mail, call a tax attorney.

About Mark

LL.M. Tax - Univ of Denver 1986 JD - Loyola Univ School of Law 1980 Botany - Southern Illinois Univ 1976 Culver Military Academy, Troop A 1971
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