IRS levy on bank account

[edhallick]

Hi, I`m new to BKforum and I thought I would post a message to see if anyone can help me through my latest nightmare with the IRS.

Yesterday (Saturday) I received a letter in the mail from the IRS saying they put a levy on my Bank account. Of course I get this letter on a Saturday when they IRS is closed and now have to wait till Monday to call them. Make me sweat all weekend why don`t they.

How this came to be is I was on a payment plan with them but then I lost my job. Then I started falling behind in my rent, so naturally the number one priority for most people was to not end up on the street, so every dime I made doing odd jobs went to rent and I stopped paying the IRS for a while (for about 6 months! Yes I know, I`m an idiot.). I even called them up and explained this to them, that I was also in the process of filing bankruptcy (which I still cannot do because that requires money)

Now I recently started working as a taxi driver and went from being 3 months behind in rent (I was almost evicted) to one month, and the problem is I recently sent my landlord the rent for November. Now I find the IRS has this levy on my bank account.

If my landlord tries to cash this check on Monday will the bank bounce it? To say he will freak out is putting it mildly as I`m pretty much on my last legs with this guy. Does anyone know if I can get the IRS to stop this levy once they send it out? I am definately calling them first thing Monday but I am unsure as to what I should say. Obviously I am in dire financial trouble and all this levy is going to do is make matters a hell of a lot worse for me. DO you think they will agree to let me back on a payment plan or is this bank levy final?

[edhallick]

P.S. As a side note, what I don`t understand is if the IRS put this levy on my bank account, how do they expect me to pay them in the future if I no longer have a bank account? By money order?

[CindyLou]

Did the levy have an effective date? The reason I ask is because on approx. Nov. 17th one of my co-workers received notice that the IRS have sent a garnishment levy to our employer to be effective on November 23rd. Luckily we had just gotten paid which gave her a little time work with them. She called the IRS and talked to them and they have her an extension until January 8th to start making payments on her payment plan again.

They faxed over a cancellation of the garnishment levy to the payroll dept and they did not garnish her paycheck. I am guessing if you can call them FIRST thing monday morning and the bank has not received the levy yet you might be able to catch it. Possibly even if the bank has received the levy but the IRS has not taken the money, they may be willing to work with you. Have you checked your account? Can you withdrawl money via ATM? You could be the cash out if the account is not frozen and pay the landlord cash and get the check back. I would high tail it to the bank and try to get the money out ASAP. Remember you can get cash out per calander day...resets everyday at midnight..even on the weekends. Maybe, just maybe, your bank didn't get the notice yet.

[CindyLou]

oh, and one more thing. My coworker had to almost beg the IRS person to fax the cancellation to the payroll dept. So be ready to be very nice, but assertive. Good luck and keep us posted. Also, could they possibly have limited hours on Sunday at the IRS..did you check?

[edhallick]

Hi Cindy, thanks so much for replying. Wow, this BB is great, I didn`t think someone would answer so fast. No, this levy didn`t have an effective date. All it says at the top is "Taxpayer copy of notice to levy" then it has "Date: 11/26/2007" which I guess is when they mailed it out (I assume they mailed another copy the same day to my bank?)..Then below that it has the address of IRS then the name of my bank (Washington Mutual)...then an explanation stating this is a notice they have sent my bank and the bank must hold my money for 21 days, which I assume means freeze.

About your co-worker, I looked up these levys and found their is two types. First they send you a "Notice of intent to levy" (which I never got) and then the final "notice of levy" which is the final nail it seems.

About the ATM withdrawal, no I haven`t tried that yet but I did buy $20 of minutes for my cellphone with a debit card (so I can call the IRS) and this "pending" thing came up on my online bank statement which I never saw before. Usually with a debit card the money is taken right out of your account, if it is pending I assume something must be up. I`m going to work now so I`ll see if I can withdraw from an ATM. Either way, first thing monday I`m calling them. Thanks for the reply

[CindyLou]

If your debit card worked chances are your account isn't frozen "yet". I would go to the bank first thing monday and get your money out if possible and tell your landlord to hold the check for cash.

My coworker's letter was not a letter of intent it was an actual notice. They were very nice and willing to lift it if she agreed to start making payments again by a january 8. They just wanted her attention it seemed.

I'm not 100% sure how the levy works. I don't know if they actually take the money immediately or the bank just freezes the money and then you have time to work with the IRS to make arrangements. Hopefully its the latter and they will work with you like they did my coworker. Keep us posted.

BTW, how much can you get out per day from your ATM?? Will you be able to withdrawl enough on Sunday and then again after midnight to cover your rent or possibly empty the account?
Do you have direct deposit? If so, can you stop it before next time?

[edhallick]

Oh god I can imagine how much I`m going to have to beg as well, I haven`t mailed them ANY money in like 6 months...It could even be longer than that I think. The only thing I can plead I guess is extreme poverty, which is damn true. They freeze my bank account, all it`s going to do is make my financial situation even more difficult, not to mention possibly getting me evicted if this rent check bounces. If I`m out on the street, do they honestly think paying my IRS bill will be my top priority? Hell no!

About the hours on Sunday, no I had no idea about that. When I called them up and all I got was their answering machine saying their hours were monday thru friday 8am to 4pm.

[edhallick]

Yeah, see that`s the thing, my rent is $900 and I think my ATM only will let me withdraw a few hundred at a time, I`ll try it though...The other thing is my landlord is a SOB and he wants me out and will use any excuse to do so. (I live in a rent controlled apt in New York city...People who live in rent controlled apts here are the #1 enemy of landlords who always want current market value for an apartment. If I was evicted he could rent out my place for about $1600) Being that I`m already a month late with rent, I have no doubt he will drag me back into court if I tell him not to cash the check. My only hope it seems that I can clear this up before he tries to cash it. And no I don`t have direct deposit, I drive a taxi now and am paid cash everyday which is good. I think what I may try to do is convince the IRS to take out a hundred or so for now and explain to my bank at the same time what is going on, tell them not to bounce the check or hold it. What a mess though, my stomach has been in knots all day over this. What gets me is even if I declare bankruptcy, I still have to pay this IRS bill (which is up to $5,500 now)

[edhallick]

Wow, look at this I found on this guys website...Maybe I should try to withdraw all that money......

Question # 1 (Multiple Choice) On Monday, your bank received an IRS notice of levy in the amount of $1,000 regarding any property of John Smith in the possession of the bank. A review of the bank's records indicates John Smith has a deposit account with a balance of $800.00. On Wednesday, John Smith makes a cash deposit of $300.00 to the account.

Answer: (C) Only the $800 in the account at the time the levy was received will be subject to the levy, so the bank, upon the expiration of the holding period, should send in $800.

A levy only applies to the funds in the account at the time the levy is received. The levy has no effect upon any subsequent deposit made by the taxpayer. The bank should have placed a hold on $800.00, the amount in the account at the time the levy was received.

[edhallick]

Also another thing is they mailed out this levy on 11/26 which is last monday. Why would it take 6 days to get from PA to New York? Could this mean my bank already got this levy and did nothing? Because from 11/26 to last Friday I had no cash in this account.

[tinroofrusted]

I am of a small majority that feels that the IRS has no legal jurisdiction here in the States, so with that said, they would NEVER be my first priority.


However, I would find a lawyer, if you are able to, and see what they can do for you!!

[edhallick]

I agree, it`s pretty crazy they can just waltz in and take your money with no warning (which they never gave me)...So I said to hell with them and was able to get $300 out by ATM so far. They said their limit is $300 per day so I`ll try for the rest tonight, I guess one minute after midnight when it`s Monday. Then I`ll buy a money order or just give my landlord the cash.

About the lawyer, yes I would love to have one but he will never get paid. What am I going to pay him with? The only recourse I can see is to tell the IRS either they put me back on a payment plan and give me back my bank account, or they don`t get paid at all. I`ll be damned if I end out on the street in the middle of winter all so I can pay my taxes. My rent comes before anything, they want to throw me in jail, fine. At least I wont be sleeping in a park bench.

[oldbaddebts]

I have had a cc do a levy on my bank account after getting a judgement. The bank charged me a $100 fee for processing it, and I got the notice of levy that day in the mail. They don't send you advance notice of levies so that you can't just empty the account and wait it out.

As for the IRS, every situation is different, but if you have only had one or possibly two installment agreements that you have defaulted on, you should be able to get another one by calling and speaking to a person, not just using the prompt system. I have defaulted twice now, and they still give me the option of an agreement, which I will have setup before my discharge to protect my paycheck. Side note, this time I will be sure to pay as agreed this time because they wanted details of employment and warned that 1 payment missed will result in pay garnishments.

[edhallick]

Well I just got off the phone with them, and I`m still in a mess. The guy pretty much went through the motions, asking my name address, where I worked, asked if I could pay the full amount. I said no of course, then set up another payment plan. The only thing though is he said whatever money I had on the day the bank received the levy is the amount they will hold for 21 days. And guess what, I called up my bank and they said they still haven`t got it. I called up the IRS again and got this pain in the ass who refused to cancel it. So basically I`m back where I started. Any money I put in risks getting confiscated for 21 days. If I put in the rent money today, knowing my luck the bank will get the levy exactly today or tommorrow. The IRS said it can take 10 days for the bank to get it.

Anyway, oh man please don`t tell me CC`s can put levys on your bank as well. How much did you owe? I have one I owe about $15,000 to, HFC. They gave me a $10k loan and $5000 credit card.. You think they will come after me? I stopped paying them last year because I`m trying to declare bankruptcy. Now it has been sent to a collection agency but all they`ve been doing is sending me letter after letter besides calling me up every two seconds.

[qwertysue]

I'd scoot to the bank ASAP, withdraw cash or get a cashiers check for the rent, go to the landlord and HAND him the cashiers check or money order for the rent...if he says he's already processed the check, see if you can still give him the cc/mo and put a stop payment on the original check.