What do I do if the IRS freezes my bank account?
UPDATED: December 13, 2019
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The IRS cannot freeze and seize monies in your bank account without proper notice. This is another tactic by the IRS to get your attention. Once your bank receives a notice of seizure of your funds, your bank has an obligation to hold the money for at least 21 days before paying it over to the IRS. You must contact the IRS immediately to negotiate either a partial or a full release of your funds.
When is the IRS Required to Release My Bank Account?
Under federal law, the IRS must release your bank account if:
- You pay the tax, penalty, and interest you owe.
- You discover that the time for collection (the statute of limitations) ended before the levy was served.
- You provide documentation proving that releasing the levy will help them collect the tax.
- You have an installment agreement, or enter into one, unless the agreement says the levy does not have to be released.
- You determine that the levy is creating a significant economic hardship for you.
- The fair market value of the property exceeds such liability and release of the levy on a part of such property could be made without hindering the collection of such liability.
The IRS may consider releasing your funds when:
- They levy before they send you the two required notices, or before your time for responding to them has passed (10 days for the Notice and Demand, 30 days for the Notice of Intent to Levy, and the Notice of Right to a Hearing).
- They did not follow their own procedures.
- They agree to let you pay in installments, but they still levy, and the agreement does not say that they can do so.
- Returning the property will help you pay your taxes.
- Returning the property is in your best interest and the government's best interest.
If the IRS has frozen your bank account and is threatening to seize the monies in your account, it is in your best interest to consult a tax attorney.