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#1836063 - 07/24/13 06:47 PM Tax Levy on Checking Account
Cale_N_Oats Offline
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Cale_N_Oats
Joined: Aug 2008
Posts: 742
Southern Illinois
The bank just received a IRS tax levy for around $10,000. The customers account only has $5,000. Can the bank place a hold on the account for $10,000 and continue to collect funds that are deposited into that account (for 21 days)? The customers lawyer said we could only hold the amount that is in the account the day we receive the levy and place the hold, which was around $5,000.
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#1836068 - 07/24/13 06:56 PM Re: Tax Levy on Checking Account Cale_N_Oats
devsfan Offline
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Joined: Jun 2004
Posts: 1,927
NYC
I believe the customer's lawyer is correct.

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#1836070 - 07/24/13 07:00 PM Re: Tax Levy on Checking Account Cale_N_Oats
BrianC Offline
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BrianC
Joined: Nov 2004
Posts: 6,316
Illinois
Don't confuse the tax levy with a Citation to Discover Assets, which in Illinois directs you to hold double the judgement amount up to the court date. An IRS levy is a snapshot. Whatever is in the account up to the amount of the levy is what you take. Also note that the levy prohibits you from taking any bank fee off the top of the funds. If there's $5,000 in the account, then you must hold that amount for the levy.

You may choose to overdraw the account the amount of the bank fee to collect it in the event the customer makes a deposit. Your would only hold additional funds for the IRS if you are served with another levy.
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#1836082 - 07/24/13 07:23 PM Re: Tax Levy on Checking Account Cale_N_Oats
Cale_N_Oats Offline
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Cale_N_Oats
Joined: Aug 2008
Posts: 742
Southern Illinois
I see, so even if they continue to make deposits in that account during the 21 day period we can still only hold the amount that is in the account the day the levy is placed. Thanks for the help!
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#1836214 - 07/25/13 12:20 AM Re: Tax Levy on Checking Account Cale_N_Oats
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,633
Galveston, TX
301.63323 The 21-day holding period
applicable to property held by
banks.

(c)(3) Transactions affecting accounts. A
levy on deposits held by a bank applies
to those funds on deposit at the time
the levy is made, up to the amount of
the levy, and is effective as of the time
the levy is made. No withdrawals may
be made on levied upon deposits during
the 21-day holding period, or any extension
thereof.
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#1836231 - 07/25/13 10:01 AM Re: Tax Levy on Checking Account Cale_N_Oats
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
An IRS levy is referred to as a "snapshot." As noted, they do not have what is referred to as a "continuing lien" against the account.
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