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Can The IRS Impose A Levy On Shared Bank Accounts?

February 21, 2012 | Comments: 0 | Views: 144

Quick Answer: Yes.

But first let's learn a little more about the IRS levy:

An IRS levy is an authorized seizure of property to satisfy a tax debt.

When are IRS levies sent?

The IRS in most cases levy after these three requirements are fulfilled.

1. The IRS assessed a tax balance and provided a "Notice and Demand for Payment".

2. The taxpayer ignored or refused to pay the balance due.

3. Finally, no less than 30 days before delivering a levy, the IRS sends a Final Notice of Intent to Levy.

Notices from the Internal Revenue Service will go to the last known address that they have on record.

Exactly what kinds of levies are there?

There are 4 general types of levy sources for the IRS.

1. Bank: When the IRS removes cash from your bank account. You will normally not know it until it has already happened. At the time the levy is issued the bank is required to freeze the money up to the amount due. The bank is expected to send the money to the IRS, if the levy is not released within 21 days.

If you have a joint bank account or any other 3rd party account, as long as the taxpayer's social security number is on it, then yes, the IRS can levy the account. Regardless of whose funds were deposited into the bank account, this is still true.

Bank levies are typically challenging to have discharged because the IRS calculates ordinary and necessary living expenses and IRS essentially takes the position that if you have money sitting in the bank, you do not require it for necessary living expenses or you would have already spent it. "Undue hardship" is the other. You will have to generally supply utility disconnected notices or a foreclosure notice.

2. Wage Levy: This kind of levy is delivered to your workplace and requires that the employer withhold a specific portion of your pay check. Approximately 85% of your pay can be lawfully levied. Social Security payments can also be levied by the IRS.

3. 3rd party accounts: This could consist of retirement accounts, stock accounts, 1099 sources and basically any income source or assets with a few exemptions.

4. Assets: Usually a challenge for the IRS to issue, making it the least typical levy issued. This is any type of asset, such as houses, vehicles, boats, etc.

How to Stop IRS Levy Action? File your returns, repay the debt in full, or negotiate.

It's important to note that before an IRS levy can be eliminated; all unfiled tax returns must be filed. The IRS won't even consider a discharging a levy until all accounts are current. Next, the IRS will discharge the levy if you pay the balance in full. Bankruptcy can also release a levy.

Unable to pay the balance? Then submit either an Offer In Compromise, Installment Agreement or have the case placed in hardship status. In the end, I always recommend professional representation. An experienced professional will know how to work the tax laws to your advantage.

The IRS levy must always be taken seriously, but with a bit of education, it is possible to work your way through, or around, a most taxing situation.

Cynthia Kuhne has been helping people resolve their tax problems successfully for over 16 years. She is a licensed Enrolled Agent with both the knowledge and experience to stop IRS levy action quickly. She is the founder and president of CKTax Inc., a full service tax relief company with an "A+" BBB record. If the IRS has attached an IRS levy to your assets, is about to, or you just have a tough tax problem, visit or call 888-894-2005

Source: EzineArticles
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