Yes, the IRS has the authority to take money directly from your bank account, but this process is typically a last resort and involves several steps.
The IRS can issue a bank levy if you owe back taxes and have not made arrangements to pay. Here’s how it works.
What Is a bank levy?
A bank levy is a legal action that allows the IRS to seize funds directly from your bank account to satisfy unpaid tax debts. When a levy is placed, your bank must freeze your account for 21 days before the money is transferred to the IRS. This waiting period allows you to resolve the debt and prevent the IRS from taking your money.
Steps the IRS takes before levying your account
The IRS doesn’t levy your bank account without warning. The process includes several steps:
- Notifying You of the Debt: The IRS will first send a “Notice and Demand for Payment,” which explains your debt.
- Sending a Final Notice: If you don’t respond, they’ll issue a “Final Notice of Intent to Levy” and wait 30 days for your response. This gives you time to arrange payments or dispute the debt.
- Placing the Levy: If no action is taken, the IRS may proceed with the levy.
How to prevent or stop a bank levy
If you receive a notice, act quickly to avoid a bank levy. You can set up an installment agreement, apply for an Offer in Compromise or request a temporary collection delay. If a levy has already been placed, you may still be able to negotiate with the IRS or prove financial hardship to lift it.
The IRS can take money from your bank account through a levy if you owe taxes. However, they must follow legal procedures and provide you with opportunities to resolve the debt before seizing funds.