Things To Do If the IRS Threatens to Levy Your Bank Account

Tax Concept

If you’ve received an IRS notice saying that they intend to levy your bank accounts if you don’t pay up in 30 days, then it’s time to pay attention. Before the IRS actually issues a levy notice, they’ve usually made a few attempts at contacting you and trying to get a payment. If you’ve received an IRS levy notice, it means that the IRS hasn’t heard from you—they think you’ve been blowing them off (which in many cases is true). If you ignore the levy notice, they’ll just take your money and the law is on their side so you need to act now.

First, the responsible thing is to call them, or hire someone to deal with them for you. (I personally think that if you’ve reached this point, it’s best to hire someone—but remember, I do this for a living, so note that I’m biased.)

There are things you can do to prevent the IRS from going through with the levy. Let’s assume that you really do owe the money:

1. You can set up a payment arrangement–you pay off the IRS on a monthly bill schedule

2.Your situation might qualify you for an offer in compromise (the pennies on the dollar thing you see in TV commercials), or

3. Maybe you’re going through hard times and need to be put into the currently uncollectable status—you still owe, but the IRS quits hounding you until you get a job or your situation changes.

But maybe you don’t really owe the money. That’s the big kicker for me. Usually, if you’re getting IRS levy notices, you do owe them money—or at least part of it, but I have seen several cases where my clients don’t owe the IRS anything! A couple of times I have even gotten them refunds instead. If you didn’t do your taxes, and the IRS did them for you, don’t assume that the IRS did them right. When the IRS does your taxes for you, they automatically put you in the highest tax bracket they can justify and you get no deductions or tax credits that you might have qualified for. (Here’s a hint: if you’ve got kids, the IRS probably did your taxes wrong.) Even if you find that you don’t owe the IRS money—you still have to contact them, let them know the situation, and then you’re going to have to provide proof. Usually your proof is your corrected tax return.

Dealing with the IRS is the best way to get yourself out of levy trouble. But here are a few things that you also might want to consider doing while the threat of a levy is still hanging over your head:

1. Make sure your name is taken off of your kids’ and/or parents’ bank accounts. If you’re on someone else’s bank account, the IRS can and will levy that account too.

2. Don’t keep large amounts in your bank accounts. If you’ve got lots of cash, then maybe you can just pay your debt. But usually, this isn’t an option for most people. If your paycheck is going direct deposit into your bank account, get the money out immediately. You can put your cash onto a prepaid Visa debit card. Once the levy is in place, the IRS can only take the funds that are in your account at the time of the levy, if you get another deposit, that money is accessible. Transfer money in only as you need to make payments out of the account.

IRS levies are serious business. Don’t make the mistake of ignoring them.


Note:  We try to answer all the questions that come to us but please be patient.  It’s our busy season right now.  We may not get to your post until the weekend.  When you make a post and use the capcha code, it won’t immediately show up.  You see, for every normal person like you that posts, there’s about three advertisements for things your mother wouldn’t approve of.  (We try to keep this a G rated website.)   We have to edit those out.  If you need an answer right away, here are some links that might help:

EIC questions of any kind:–Use-the-EITC-Assistant-to-Find-Out-if-You-Should-Claim-it.

How to find free tax preparers:

How to find your local IRS office:

If you want to hire us, please call (314) 275-9160 or email us.  We do prepare returns for people all over the country (and a few foreign countries as well.)  We are sorry but we cannot prepare an EIC return for someone outside of the St. Louis area because of the due diligence requirements.

205 thoughts on “Things To Do If the IRS Threatens to Levy Your Bank Account

  1. Hi Rose,
    So here’s the deal – since you were not granted innocent spouse relief – this IRS holds you to be equally responsible for all of the 2011 IRS debt. Now, the good thing here is that your ex is paying the payment plan. Kudos to him! But, let’s say something happens to him and he quits paying – well then the IRS will still come after you!
    I once had a divorced client, he got an IRS letter saying he owed additional tax from a year he was still married. He owed the tax, not his wife. We sent a letter to the IRS saying that he owed the tax, not his wife and that he would pay. His wife filed a tax return and the IRS held her refund to collect on the tax, even though we told the IRS it was not her tax.
    So–you see how this could be an issue for you, right?
    So, I kind of want to go back to the innocent spouse relief. You say it was denied. Did you have a professional help you with that? I’m guessing that maybe the wrong category was used. If you just categorically deny any tax–that’s pretty hard to prove. But if you could show what part you actually owed, separate from him – or taxes under the divorced decree – you might have better luck. (And if you already did that then I apologize, I’m just trying to get you whatever we can.)
    Anyway, right now, as things stand, if your ex defaults on his payment plan, the IRS could go after you for the entire remaining balance due. Sorry.

  2. Hi Jan I am now going to speak to a professional. When I received the letter of preliminary determination it says I have 30 days to appeal. I also found out this whole case already went to tax court by petition from my ex without my knowledge. This is why I was denied. I had no idea he did this. Anything I can do there? Just trying to figure out how to do this appeal. Attorneys want $750 just to get started…is this something I can do on my own?

  3. Also my ex owned the business and his tax accountants and attorneys did all the taxes. I just signed the form every year. I have no clue how to do complicated taxes. Being single with no business mine take about 20 minutes to do online….

  4. My boyfriend got a letter from the irs threatening to seize my bank account. His name is not on my account, but some of his payroll is direct deposited in my account.
    I also use this account for my payroll direct deposits. Since his name is not on my account, can they still take it?

  5. Hi Christina,
    I’m a little concerned about that letter. Usually, the IRS doesn’t tell you which bank account they’re going after until after they’ve already attacked it. For example: you could get a letter saying that they will levy your bank, but they don’t tell you which bank they’re going to levy until the levy’s already in place. So, my guess is – they’ve already put the levy on.
    Here’s the thing – normally I would say the IRS cannot levy your bank account if his name isn’t on there. BUT- and this is big, he’s direct depositing funds into your bank account. I’m guessing that he also is allowed to make withdrawals from your bank account – so he has some sort of legal right to your account somehow. So – yes, I’m saying the IRS can do it.
    I once had a client with an adult son, the IRS levied the son’s bank account for the father’s debt. The account had been set up back when the son was a child, but he kept the same bank account into adulthood and never changed it. I managed to successfully argue that they couldn’t levy the son’s account since the father had no more access and was just on the account in name only. The IRS accepted that position.
    But, they had also levied my client’s adult daughter’s account as well. In that case, the father had been putting money into her account and the IRS could prove that he was actively using it. (Actively using it to help her – but still he had access to the funds.) So the IRS took her money and I couldn’t stop that one.
    So, I’m thinking that your account is in trouble. You may be able to talk to the IRS and unfreeze some of the assets if you can prove that your boyfriend can’t access your account or isn’t on there, but I think it’s going to be a tough sell. I would set up a new account in your name only without him. No direct deposit, not access, no nothin’! Until he gets his IRS issues taken care of, you don’t want any of your funds co-mingled with his. It’s too dangerous for you.

Leave a Reply

Your email address will not be published. Required fields are marked *