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Can the irs levy business account for personal taxes owed?

Customer Question
Hello. can the irs...

Hello. can the irs levy business account for personal taxes owed?

Accountant's Assistant: What state are you in? It matters because laws vary by location.

Indiana

Accountant's Assistant: Has anything been filed or reported?

Filed ? as in?

Submitted: 4 months ago.Category: Tax
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Answered in 7 minutes by:
3/8/2018
Tax Professional: Lev, Tax Advisor replied 4 months ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,141
Experience: Taxes, Immigration, Labor Relations
Verified

In general

-- if you operate a business as a sole proprietorship - the IRS can levy the entire amount of your business bank account and businesses accounts receivable to pay for your personal tax liability.

-- if the account receivables are that of a corporation or LLC and the tax liability is your personal income tax liability, the IRS cannot levy assets owned by the corporation or by the LLC those business accounts receivable.

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Customer reply replied 4 months ago
the liability owed is for my prior years personal taxes. the business bank account is set up in my business name and tax id#. I am a signer on the account so was worried it could be levied.
Customer reply replied 4 months ago
oh and the business is an llc but I am the only owner, will this automatically make me a sole proprietor?
Customer reply replied 4 months ago
Here is a copy of the IRS form showing my tax id#.
Tax Professional: Lev, Tax Advisor replied 4 months ago

If your business is set as an LLC - the IRS may not levy on LLC's bank account.

That LLC is treated as a different "person"

That is regardless if the LLC is reported as a solo proprietorship for income tax purposes.

However - that doesn't mean you have nothing to worry....

I suggest to set an installment payment plan with the IRS - and as long as you are current on that plan - they will not issue any levy.

Another issue that may make your LLC bank account vulnerable for IRS levy - if you commingle business and personal money.

For instance - if you are using LLC's bank account to pay your personal bills - that woudl mean you are using it as personal account - and it may be levied.

Be very careful - not to mix personal and business transactions.

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Tax Professional: Lev, Tax Advisor replied 4 months ago

I appreciate if you take a moment to rate the answer.

Experts are ONLY credited when answers are rated positively.If you still have any doubts, need clarification - please be sure to ask.I am here to help you with all Social Security / Tax related issues.
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