Bank Levies in Florida: What Happens When the IRS Freezes Your Account

Bank levies in Florida can be placed by a creditor when you owe them a debt you haven’t yet paid. A bank levy placed by the Internal Revenue Service (IRS) can freeze your bank account, meaning you can’t access any funds. After a short period of time, the agency can then remove any funds in your account to cover the tax debt you owe.

It can be very scary when you receive notice of a bank levy, especially from a federal agency like the IRS. It’s important that you know how you can stop a levy and limit the financial consequences of IRS collection actions.

The IRS Bank Levy Process

The IRS submitted nearly 313,800 notices to third parties to implement a levy. This includes parties like banks and other financial institutions. The IRS doesn’t need court approval to place a levy on your bank account, but that doesn’t mean the IRS will place a levy randomly. There are steps the agency takes when recovering a tax debt. These steps include:

1. The IRS assesses a tax debt you owe.
2. It sends you a tax bill or Notice and Demand for Payment.
3. If you don’t pay the amount or contact the IRS to make a plan for your tax debt, the IRS levies your bank account.
4. You’ll get a Final Notice of Intent to Levy, a Notice of Your Right to a Hearing, and a Notice of Third-Party Contact.
5. After 30 days have passed since the notices were sent, the IRS freezes your bank account.
6. After a 21-day waiting period where your account is frozen, the IRS will remove the account funds necessary to pay off your debt.

It’s crucial that you act during the 30-day or 21-day periods. The IRS is open to negotiation if you can’t afford your tax debt, but you have to contact the agency to find alternate debt settlement methods. In 2024, the IRS helped over 62 million taxpayers with their taxes. When a bank levy causes you hardship, there are steps you can take to stop it.

What Can You Do to Stop a Bank Levy?

Whether you have received notice of the IRS’s intent to levy your account or your bank account has already been frozen, you need to act quickly. Some steps to consider to stop a bank levy include:

1. Request a hearing. One notice the IRS sends you is Notice of Your Right to a Hearing. This outlines how you can request a Collection Due Process hearing if you think the levy was made in error or if you disagree with the amount of the tax debt.
2. Contact the IRS. The IRS can release the levy if you show proof of immediate economic hardship caused by the levy and request relief for that reason. This means the levy would prevent you from paying for basic and reasonable living expenses.
3. Debt settlement negotiation. The IRS may be open to negotiating your tax debt if paying the debt would cause financial harm. Negotiations are also possible if you don’t have the financial ability to pay the debt at all.

The debt could be marked Currently Not Collectible, or you could enter an installment   agreement. These options give you time to pay the debt in full. You could also secure a penalty abatement or an offer in compromise, reducing how much you have to pay.

It’s incredibly helpful to work with a tax attorney for any of these options. An attorney can help you request a hearing, gather documentation to prove financial hardship, or negotiate with the IRS on your behalf. This can help you prevent the negative financial consequences of a bank levy.

FAQs

Q: What Happens if Your Bank Account Is Levied?

A: If your bank account is levied, it means that a creditor is removing funds directly from your bank account in order to cover the debt you owe. Most creditors need court approval to do this. If you don’t take action after receiving notice or after your bank account is frozen, then you could lose some or all of the funds in your bank account. A creditor could even levy multiple accounts if it’s necessary to cover your debt.

Q: How Can You Avoid a Bank Levy?

A: The most effective way to avoid a bank levy is to pay back your debt in full. Once the IRS or another creditor processes that payment, the levy should be released. There may be other options for stopping a levy, such as negotiating with the creditor directly. The IRS is open to negotiations regarding your debt if you are not financially able to pay the debt in full. The agency may release the levy if it causes economic hardship.

Q: What States Do Not Allow Bank Levies?

A: There are no states that do not allow bank levies, although some states have stronger protections than others. Bank levies are an essential collection action used by creditors, including tax agencies.

In Florida, there is the head of household exemption, which protects your wages from a levy if you provide support for a minor or dependent. Other assets in your bank account might still be levied, however. Additionally, this protection only applies to state debt, not federal tax debt.

Q: Should You Hire a Bank Levy Lawyer in Florida?

A: It’s helpful to hire a bank levy lawyer if you don’t have the financial means to pay your debt. A lawyer helps you assess your finances to find the right way to resolve the debt, like negotiating a payment plan. A skilled lawyer can negotiate on your behalf. When your bank levy was placed by the IRS, it is important to find a tax attorney who understands bank levies and is licensed to deal with the IRS.

Find the Right Florida Bank Levy Attorney

Bank levies in Florida can be very disruptive in your daily life, especially when you can’t access your accounts. At TaxSmith, LLC, our firm has years of experience navigating IRS collection actions and finding the ideal resolution for your tax debt. We want to help you take control of your financial interests and give you straightforward tax advice. Contact our team today.