If you have ever received a notice in the mail from the IRS stating that they are going to levy your bank account, you know how scary it can be. A bank levy is when the IRS takes money directly out of your bank account to pay off your tax debt. This blog post will discuss what you can do to avoid a bank levy and how to deal with one if it happens.
1. File Your Taxes on Time
The best way to avoid a bank levy is to file your taxes on time. If you owe the IRS money, they will send you a notice stating how much you owe and the consequences if you do not pay it back. One of those consequences is a bank levy. So, make sure that you file your taxes on time to avoid this issue.
If you cannot pay the full amount of your taxes, you can set up a payment plan with the IRS. This way, you can avoid a bank levy and still pay off your debt. To set up a payment plan, you can contact the IRS or use their online tool.
2. Open a New Account
If you have received a notice from the IRS that they will levy your bank account, it is best to open a new one. This way, the IRS will not be able to take any money out of your old account.
Keep in mind that if you owe back taxes, the IRS can still find out about your new account and levy it. So, make sure that you are still making payments on your old account to avoid any penalties.
3. Negotiate With the Creditor
Having a bank levy can be very stressful. If you cannot pay your taxes, try negotiating with the creditor. See if they will work with you to develop a payment plan that you can afford. If you can negotiate a payment plan, make sure to stick to it. Otherwise, the IRS may levy your account again.
4. Contest the Lawsuit
If you disagree with the IRS’s decision to levy your bank account, you can contest the lawsuit. This means that you will go to court and argue your case. It is important to note that this option should only be used if you have a strong case. If you do not, the court may rule in favor of the IRS.
According to studies, the IRS’s fiscal year extends from October 1 to September 30. So, if you received a notice in the mail stating that they will levy your bank account, it is likely because you owe money from a previous tax year. Contact the IRS as soon as possible to avoid having your account levied. Contact us today and we can help you through your bank levy.