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Lane
Lane, JD, CFP, MBA, CRPS
Category: Capital Gains and Losses
Satisfied Customers: 10131
Experience:  Have been providing Financial and Tax advice for 30 years.Concentration in Corporations, Estate, Income Tax and Business Planning
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The IRS is about to levy my bank account. Is closing the

Customer Question

The IRS is about to levy my bank account. Is closing the account and switching to a new bank illegal in any way?
Submitted: 1 year ago.
Category: Capital Gains and Losses
Expert:  PDtax replied 1 year ago.

Hi from Just Answer. I'm PDtax, and can assist.

Closing a bank account that is threatened with IRS levy is not illegal. But it will set in motion a list of things that you will not like, including making the IRS Revenue Officer very mad. I can suggest something more appropriate that will allow you to escape IRS levy and negotiate a resolution on your terms, not theirs.

Expert:  PDtax replied 1 year ago.

I'll need some more insight into who owes the tax (you personally or your business), and how your business might be set up if that's what's at stake. Since quite a bit of time will be needed to make sure what I tell you is applicable to your situation, I will post an Offer for that professional time. Accept, and we can discuss your issues over the phone for privacy.

Customer: replied 1 year ago.
I received a CP523 then an Lt16. Is there another notice that I will get in this situation?
Expert:  PDtax replied 1 year ago.

I do not show acceptance on my end of my Offer to assist. Please advise.

Customer: replied 1 year ago.
It was a follow up question as allowed by justanswer.com
Expert:  PDtax replied 1 year ago.

Since you did not wish me to assist as i offered, I will opt out. I saw you asked similar questions of others.

Expert:  Anne replied 1 year ago.

Hi

I'm Anne. I've been preparing taxes for 27 years and I'll be happy to help you.

First the above expert was correct in that it is not illegal to close out the account, as long as the IRS does not have a lien against it, but regardless of whether you do that or not, you definitely need to contact the IRS and try to resolve this matter.

The CP 526 letter states that you defaulted on an installment agreement that you had in place with the IRS. Did you in fact have an installment agreement with the IRS that you defaulted on? Please see below:

https://www.irs.gov/Individuals/Understanding-your-CP523-Notice

The LT16 letter is issued when you do not contact the IRS re: taxes due, and is warning you that they may go to the next level by leveling your wages, bank accounts, and other forms of income.

The LAST thing you want to do is to NOT contact the IRS as it can look upon your silence unfavorably. If nothing else, it can delay any more action from the IRS. Please see below:

https://www.irs.gov/Individuals/LT-16-%28Letter-2050%29-Frequently-Asked-Questions-%28FAQs%29

If you have any questions, please post them here and I'll be notified.

If this answer has helped you, please take the moment to rate positive.

It is only through positive feedback that we are compensated for our time and knowledge.

Thank you for using justanswer.

Customer: replied 1 year ago.
Is there another notice that I will get in this situation after the LT16?
Expert:  Anne replied 1 year ago.

The next notice will be "Intent to Levy". You might find the following helpful:

http://robergtaxsolutions.com/2011/08/things-to-do-if-the-irs-threatens-to-levy-your-bank-account/

The IRS will not start garnishing your wages without giving you notice and an opportunity to make payment arrangements. But, unlike most other creditors, it does not have to first use you and get a judgment in order to start the garnishment process.

To start the process, the IRS must send you a written notice stating the amount you owe. The notice must itemize all of the charges (tax, penalties, and interest) and give you a date by which you must pay the balance in full.

If you don't comply with the demand for payment within the stated time, the IRS will then explore how it may most effectively force you to pay the tax. This may include seizing your assets, placing liens on your property, taking future refunds, and garnishing your wages.

Customer: replied 1 year ago.
If I simply close my bank account when facing an IRS levy is it a violation of 26 USC 6901 Fraudulent Conveyance?
Expert:  Anne replied 1 year ago.

I assume you found either this posting or 1 similar to it:

http://www.avvo.com/legal-answers/an-irs-levy-is-about-to-be-placed-on-my-bank-accou-2392790.html

You have not, to date, received an "intent to levy". If you had, then closing/moving funds from that account could be considered fraudulent conveyance.

Again, your best bet is to work WITH the IRS, not against it.

Customer: replied 1 year ago.
I received the CP523 which said "notice of intent to levy" on it.
Expert:  Anne replied 1 year ago.

I'm going to "opt out" of this question to see if any of my colleagues has had direct experience with possible fraud charges from closing the account.

The only thing I've seen happen is that the levy against your wages increases, since that becomes the only source they can levy against.

Expert:  Lane replied 1 year ago.

hello again.

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As I mentioned before, because you have defaulted on an installment agreement, the intent to levy notice has already happened.

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What you might consider is just not keeping a lot of money in the account.

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a Levy is a one time shot where they take whatever is there is it is less than the levy amount

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a garnishment, however, is different ... once it's the it's there

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although, analogous to the levy ... if you're self employed they have to re-initiate the garnishment every time your payor pays you (another one-time shots, and so administratively more difficult)

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but the BEST advice here is to do what I told you early on and all of the other experts have said have said as well CALL THEM.

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THAT can stop the locomotive.

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and YES MOVING a lot of money (after the notice )... IF they play hardball with you, could be Fraudulent Conveyance.

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CALL THEM - so simple

Expert:  Lane replied 1 year ago.

If this HAS helped, and you If you don't have additional questions on this, I'd appreciate a positive rating (by clicking the stars or smiley faces on your screen) ... that's the only way I'll be credited with a portion of what you've paid JustAnswer.
...

Lane

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