What To Do if the IRS Freezes My Bank Accounts?
When the Internal Revenue Service (IRS) takes action against you, it’s easy to feel under attack. IRS enforcement can be intimidating on its own, after all, but when things escalate, you may be caught off guard, asking a question you never thought possible: “What do I do if the IRS freezes my accounts?”
First— keep in mind, you’re not alone. Thousands of Americans find themselves wondering how to get out of this very scenario. It is important to keep calm, understand the situation fully and enlist the right support.
Here, we’ll take a closer look at what to do if the IRS takes forceful action against you. If you find yourself asking, what to do if the IRS freezes my accounts, you likely need professional support.
Pay Attention to Notices
Of course, it’s tempting to ignore contact from the IRS, including letters or phone calls. They are often intimidating in nature and escalate quickly. If you owe back taxes, it’s easy to feel overwhelmed by this communication.
While looking the other way might be a short-term solution on your end, the IRS will not be ignored. Once they have you in their sights, they will find a way to reach you.
Chances are, if you are asking yourself, ‘What do I do if the IRS freezes my accounts?’ you have already received a good number of notices or warnings. Before the IRS freezes your accounts, they are required to send you a Final Notice of Intent to Levy, Letter 1058 or LT11.
If you receive Letter 1058 or LT11 when things have escalated, and with a final warning that they plan to freeze your assets, you’ll need to move quickly. If you fail to respond within 30 days, your accounts could be frozen.
Understand the Reach of the IRS
When the IRS fails to recover money that it claims you owe, it has several tools at its disposal to force payment. These include wage garnishing, tax liens on property, account freezing and more. The IRS can also go after your retirement funds, pension and other sources of savings or income.
Often, when the IRS goes after your accounts, it is through a bank levy, which freezes your assets and prevents you from gaining access.
So, what happens if the IRS freezes my accounts?
If your accounts have been frozen, even though your accounts are still in your name, they are legally, temporarily under the control of the IRS. If you think the IRS has a long reach, you’re right. Whether you are within the 30-day window of warning, or the 21-day bank levy period, it’s important to act quickly.
Use Your Window of Time
So, you’ve received a Final Notice of Intent to Levy from the IRS — a formal letter warning you that they will freeze your assets if you don’t pay overdue taxes. What now? Essentially, the clock begins to tick. Unless you resolve your issues with the IRS within the next 30 days, they will begin to use more drastic measures to reclaim the money they say you owe.
In other words, this window of time is critical. Rather than ignore the IRS notice, familiarize yourself with your situation and your options.
If you do nothing for 30 days, the IRS will seize your accounts. When the bank levy takes effect, the bank will freeze and set aside your money for 21 days, after which, it will be sent to the IRS. If you don’t have enough to cover the amount they say you owe, they will move on to assess and retrieve from other accounts.
If you’ve received a Final Notice of Intent to Levy from the IRS (Letter 1058 or LT11), you may feel overwhelmed. “What do I do if the IRS freezes my accounts?” Most important, don’t hit the panic button, just yet. You’ve got 30 days to take meaningful action, which is enough time to find the professional support you need.
What Do I Do First?
If you agree with the amount the IRS says you owe and you have the money available to pay the bill in full, go ahead and pay it within the 30-day period, to avoid having your accounts frozen.
If you are unable to pay the full amount or disagree with the total, you will need to work out an agreement with the IRS. Depending on the amount you owe, you may qualify for one of the following agreements:
- An installment agreement, which allows you to pay your tax debt over a period of time
- An Offer in Compromise, which will reduce the amount owing and allow for payment over a period of time
- Currently Not Collectible status, which indicates you would suffer financial hardship—unable to pay basic living expenses—if you didn’t have access to the accounts in question
Alternatively, you may need to prove that the IRS has made an error. No matter which route you decide to take, it is important to have a team of professionals help you through this period.
When you first ask yourself, “What do I do if the IRS freezes my accounts?”, it’s important to keep a level head and seek the help you need. Even if you don’t resolve your issues by the end of the 30-day warning period, you subsequently have 21 days, during which your money will be frozen within the accounts. It is only at the end of this 21-day period, if things are still unresolved, that the bank will release the funds to the IRS.
Within these 51 days, it is important to find the best team to support you. With the right professionals on your side, you will have your accounts unfrozen and any bank levies released.
The Right Team Matters
If the IRS has been after you to pay back taxes for a while, chances are good that you either disagree with the amount they say you owe, or you simply do not have the funds available to cover your bill. In either case, if you find yourself wondering what to do if the IRS freezes my accounts, it’s important to get an experienced team working for you.
When the IRS has your bank accounts in their sights, it’s time to get the help you need. Only an experienced tax team can help you navigate negotiations with the IRS in a time-efficient manner. You don’t have to face the stress of IRS negotiations alone. The right team will be up to date on current tax laws and understand the best ways to work with the IRS.
At Franskoviak Tax Solutions, we have helped thousands of clients with tax planning for more than 30 years. We provide comprehensive tax services with first-class expertise and a personalized, boutique-style approach. Speak to our team about personal and business taxes, IRS tax deadlines, payroll taxes, IRS tax relief and tax problems such as IRS tax notifications, delinquent taxes, account seizures and more.
Start with a free consultation—we’re here to help you communicate with the IRS, negotiate on your behalf and avoid having the IRS freeze your bank accounts.