The IRS has vast overreach during collection efforts including the issuance of an IRS levy. This extends to many types of bank accounts, much to the chagrin of struggling taxpayers.
In a previous blog, we touched on the potential for assets held in personal bank accounts to be seized. Business bank accounts are another matter altogether. Keep reading to discover how and why business banking levies occur:
Business Bank Levy Basics
In many ways, business bank account levies reflect the personal account seizures we detailed in the previous guide to collection activity. In both cases, the IRS is forced to complete a 21-day waiting period. This technically should give you a little extra time to get your affairs in order so you can either dispute the levy or make alternate arrangements with the IRS.
In reality, things get a lot more urgent when the IRS is after your business account, as the funds will be frozen during those 21 days. The IRS may not have taken that money yet, but it will remain inaccessible. As such, you may need to argue for a partial levy release, as these frozen funds could cause hardship for your employees.
Don’t be surprised if the IRS proves highly strategic with levy timing. Entrepreneurs have been surprised to discover that levies go through immediately prior to payroll. What’s more, the IRS has the ability to levy accounts receivable, so any funds that are supposed to be dedicated to your business may go to the agency instead.
The Urgent Need for Action
IRS levies are always urgent, but they become that much more worrisome when your business is at risk. Add in the potential for payroll to be impacted, and this can harm not just you, but also, your hardworking employees. As such, it’s important to get an enrolled agent in your corner as soon as you anticipate that collection activity will impact your business. Our team at the Highland Tax Group can help, so be sure to get in touch.