What is the Duration of IRS Bank Account Freezing?

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What is the Duration of IRS Bank Account Freezing?

If you owe taxes to the Internal Revenue Service (IRS) and fail to pay them, the government agency can take various steps to collect the debt, including seizing your assets and garnishing your wages. One tactic that the IRS may use is to freeze your bank account, which can cause significantfinancial disruptionand stress. How long can the IRS freeze your bank account, and what can you do about it? Let's explore the issue in more detail.

The Basics of IRS Bank Account Freezing

When the IRS freezes your bank account, it essentially puts a hold on your funds, preventing you from withdrawing or transferring them. The action is called a levy, and it can affect all the money in your account, except for the minimum amount that the bank is required to leave as exempt. The exempt amount varies depending on your situation, but it is typically around $1,000 or the balance of your account if it's lower than that.

The IRS can levy your bank account only after it has sent you a notice of intent to levy, giving you at least 30 days to respond or request a hearing. If you don't respond or resolve the issue, the IRS can then send a levy notice to your bank, which must comply with the order within 21 days. Once the bank receives the notice, it must freeze your account and send the funds to the IRS after 21 more days.

The Duration of IRS Bank Account Freezing

The duration of IRS bank account freezing can vary depending on several factors, including the type oftax debtyou owe, the amount of the debt, and your efforts to resolve the issue. Generally, the IRS can keep your bank account frozen until you either pay the debt in full or arrange a payment plan or settlement with the agency. If you can't pay the debt and don't qualify for an offer in compromise or other relief programs, the IRS may continue to levy your bank account periodically until the debt is satisfied.

However, the IRS must release yourbank account levyif you can prove that the action is causing you an economic hardship, meaning that it prevents you from paying your necessary living expenses such as rent, food, utilities, and medical care. To demonstrate hardship, you need to provide detailed financial information to the IRS, such as your income, expenses, assets, and liabilities, as well as evidence of your hardship, such as bills, receipts, and medical reports. The IRS will review your situation and may release the levy partially or fully, depending on its assessment.

What to Do If Your Bank Account Is Frozen by the IRS

If your bank account is frozen by the IRS, you should take several steps to protect your rights and interests. First, don't panic or ignore the situation, as it can worsen your financial problems and lead to more severe actions by the IRS. Instead, read the levy notice carefully and understand your options. You may be able to negotiate a payment plan or an offer in compromise with the IRS, or you may contest the levy through a hearing or a lawsuit.

Second, contact your bank and ask for a copy of the levy notice and the exemption amount. Make sure that the bank has followed the procedures correctly and that the exempt funds are still available for you to use. You may also want to open a new bank account at a different institution to avoid further levies.

Third, seek professional help from a tax attorney, a certified public accountant (CPA), or a tax resolution specialist. These experts can assist you in communicating with the IRS, providing the necessary documentation, and exploring all your options for resolving the debt. They can also help you to avoid scams and frauds that prey on vulnerable taxpayers.

Conclusion

The duration of IRS bank account freezing depends on various factors, but it can last until you pay the tax debt or reach an agreement with the agency. If you face a bank account levy, don't ignore it or panic, but take the necessary steps to protect yourself and seek professional help. By understanding your rights and options, you can minimize the impact of the levy on your finances and move towards a resolution of the tax debt.