3 FAQs on bank account freezes for tax debt
The IRS may not call it a freeze. But when they put a 21-day hold on your bank account, preparatory to taking money from it to pay tax debt, a freeze is the effect.
The resulting situation is immediately an urgent one. You can’t get at the money in your account until the hold is cleared and the levy against your property released.
In this post, we’ll address frequently asked questions if you are facing such a situation.
Are there ways to get the levy released during the 21-day waiting period?
If you get an IRS levy notice in the mail, you have 21 days to contact the IRS and get the matter resolved before they start taking money from your account.
One way to resolve the matter is to make arrangements to pay your tax debt, such as through an installment agreement.
But it is also possible that the levy was made in error. For example, the money in the bank account may not actually be yours. You may only have had power of attorney to manage it for someone else.
What if you are experiencing financial hardship?
The IRS is required to release the hold on your account if a levy would result in economic hardship to you. If you need the money to meet basic living expenses, the IRS is supposed to let go of your account.
Do you have the right to appeal a bank levy?
If the IRS does take money from your bank account, you can try getting it back by filing an appeal. The IRS has an entire publication, Publication 1660, on Collection Appeal Rights.