941 & Business Taxes

IRS Levies: When Banks Don’t Know the Law

This morning, I had a panicked call from a customer from Iowa we helped this summer from Iowa. Earlier this year, we helped this client get "currently not collectible" status on his 941 payroll tax debt. Or so we thought?!

"Jay, they levied my bank accounts again."

"What?!" I said, "Impossible. It wasn't the IRS that did it. It must have been the State of Iowa."

"No, Jay. It says the 'IRS.'"

After he faxed me the paperwork, I saw that the client was correct: the IRS had levied his bank account and sent out a cashier's check for $6958.00, made out to the IRS, for all of the money in his account. However, upon closer review, the NOTICE OF LEVY was dated June 22, 2009. Our old colleague at Washington Tax Services, Matt Woare, had the right analysis: this was a bank error!

Important note: bank levies are one-time events that affect only monies in your account ON THE DAY the levy is received.

Apparently, the levy notice sat in a bank clerk's in-box for five months until she noticed it. At my customer's insistence, she called me today, and carefully, I explained to her the law -- of course -- telling her to call the IRS for verification. Fortunately, she had not sent the check to the IRS yet!

This wouldn't be the first time that we have seen small town banks incorrectly enforce a bank levy. Most large banks don't make this kind of error.

Is 2024 the year to solve your tax issue? WATAX is ready to assist you now. Please call us at 1-888-282-4697 or email us a description of your tax issue and we'll contact you promptly.

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