Welcome to the site. I'mCustomer and will be helping you today.
It sounds like you were levied on an open business account. A bank account you kept open for years, inviting such an attack.
statute is still open on both. You signed an installment agreement
and 433-F, which disclosed the bank account numbers and asset
information (the real purpose for the form
It also sounds like you are working with ACS, the IRS office of collection clerks. I never, ever recommend negotiating with them. Results like this happen too often when dealing with ACS.
There is something you can do, since you are caught in the IRS collection system incorrectly. File a Form 911, Application for Taxpayer Assistance Order, and ask for the following relief:
Release of levy
Assignment of Revenue Officer to substitute for ACS
Volunteer to complete the installment agreement paperwork to accompany release of levy (don't let them insist on keeping any $$ if you agreed to make payments).
Form 911 is processed by the Taxpayer Advocate Office (TAO), a separate part of IRS with extraordinary powers to cut through red tape and assist. You can do this without a tax pro making the request for you.
http://www.irs.gov/pub/irs-pdf/f911.pdf is a link to the form and instructions, including how and where to submit the form. Add copies of anything you want the TAO to review.
They should execute a temporary release of levy if you can demonstrate good faith in your efforts to respond, and demonstrate the hardship that the levy created. Not paying employees, rent, or other expenses might not be a hardship. Loss of business, utility shutoffs, or more serious things that threaten your survival are the kinds of damage to document.
We do this work for people, and my experience with the TAO has been genuinely superior to the IRS in general. The Advocates are experienced pros, who work cases to a conclusion.
I typically recommend the services of a tax professional in matters like this. Hiring someone could buy you some time, if that was needed, but the dollars involved and the remedy you need, release of a levy that crossed your documents in the mail, are issues you should be able to address with the TAO.
Most TAO offices don't take direct meetings, and limited phone contact. A fax of your material, followed with a phone call to their office to confirm receipt, is the best way to start.
Thanks for asking at Just Answer. Positive feedback is appreciated. I'mCustomer