Did you know the government has the authority to freeze your bank accounts under certain circumstances? If you owe the IRS for a prolonged period of time despite their best efforts to retrieve what is their due, they may slap you with a tax levy. But the government can only freeze your money for 21 days and the freeze only applies to the money that is in your account at the time the levy is issued. Any deposits thereafter are not frozen. It would take a second levy to freeze deposits made after the initial levy. Here are a few things you can do to avoid ever having a levy put on your accounts.
Essentially, you need to take responsibility for your tax debt by responding promptly to all IRS correspondences. Give the IRS a clear picture of your financial situation and as far as possible, make a token payment even if it is $20. Showing some form of cooperation and good faith in this way goes a long way to avoid a tax levy.
In addition to explaining your financial problems to the IRS, if you can demonstrate a financial hardship, a levy will not be put on your accounts. For instance, if you are a business owner and you need money for your payroll, that is classified as a financial hardship. A serious illness, emergency medical treatment or an unexpected tragedy also qualifies you to avoid a tax levy. Complete the required form straight away and treat all agents you talk to with respect and chances are good you will avoid that dreaded tax levy.
It is also advisable to agree to a payment plan even if you may not be able to keep to it. This will buy you some time while you sort out a more workable solution. Most people would rather be on a payment plan than to have their accounts completely frozen. If you can demonstrate financial hardship, you can get a payment plan that fits within your tight budget. But time is of the essence here. You should make your plans early and not at the last minute just when a tax levy is about to be issued.
The best way to preclude a tax levy is to pay up your tax debt. Of course, for most people this move would have been made if it was at all possible. But some people simply refuse to pay because of some grouse with the IRS and end up with a levy. If this situation describes you, it is best not to refuse paying. The better thing to do is pay up your tax debt if you can afford it and take up your case against the IRS through other channels if you feel you really have been wrongly assessed.