An IRS levy is the actual action taken by the IRS to collect taxes. When a business owes taxes the IRS may issue a levy to a bank to take all the funds in the account, it may issue a levy to the business’ merchant account, it may issue a levy to the business’ clients, or the IRS may issue a levy to the business’ other income sources. IRS levies on a business can take all of a business’ income and effectively shut a business down.
The person, company, or institution served with the levy must comply or face their own IRS problems. Once the person, company or institution who receives the IRS levy, they will become aware that the business has a tax debt and the amount that the business owes the IRS. The person, company or institution that receives the IRS levy is also faced with additional paperwork in order to comply with the levy. The awareness of the tax debt and the additional paperwork often results in considerable strain on the relationship between the business and the person, company or institution who received the levy.
Levies should be avoided at all costs and are usually the result of poor or no communication with the IRS.
When the IRS levies a bank account, the levy is only for the particular day the levy is received by the bank. The bank is required to remove whatever amount is available in the business’ accounts that day (up to the amount of the IRS levy) and send it to the IRS within 21 days, unless notified otherwise by the IRS. This type of levy does not affect any future deposits made into your account, unless the IRS issues another bank levy.
Any IRS receivable or income levy is different than a bank levy. Receivables and income levies are sent to the income source and remain in effect until the IRS notifies the income source that the levy has been released.
We can help your business avoid getting levies filed and we can help your business if levies have already been filed.