While a tax lien is a mere legal claim against your assets, a levy is the actual seizure of your property to meet your tax debt. If the IRS determines that you have refused or neglected to pay your taxes and you have not made or kept any arrangement to settle your liability, they have the power to take funds out of your bank accounts. The IRS can seize all the money that is available for withdrawal, up to the amount that you owe. Furthermore, the IRS can continue filing levies until your debt is completely paid.
When the IRS sends you a Final Notice of Intent to Levy and Notice of Your Right to a Hearing, you have 21 days you can act to avert the levy process. A tax professional can help you determine your best options. Your options may include a bank levy reversal, settlement negotiation, or installment payment plan.
The IRS must release a levy under these circumstances:
-You have paid your tax debt.
-You set up an Installment Agreement which will not allow the levy to continue.
-The collection period ended before the issuing of the levy.
-The IRS finds that the levy imposes financial duress.
-The levy was not issued properly.
If the IRS incorrectly levies your bank account or continues to levy your account after you have paid off your tax liability, you may seek reimbursement for bank charges. Complete Form 8546 (Claim for Reimbursement of Bank Charges) and mail to the IRS address listed on your copy of the levy.
To qualify for reimbursement, you must be able to show that the IRS is responsible for the error. You must also prove you did not contribute to continuing or exacerbating the error. If the IRS denies your request, you can sue the government for damages.