IRS Levy Mistakes Cause Taxpayer Holiday Headache

Today a client experienced an IRS run-around that was so typical, I had to share.

My client is the fiduciary trustee of a trust account.  It is not his money.  I repeat, it is not his money.  The IRS issued a bank levy and specifically referenced the trust account in order to satisfy his delinquent taxes.  The particular account conspicuously states that it is a trust account for another's benefit, and that my client is a mere trustee.  This is a big IRS no-no.  From a banking perspective a trust account is a "special deposit."  Did I mention that none of the funds are my client's funds, as he is a mere trustee or steward of the account? 

The bank's hands are tied.  It must hold the funds 21 days, then turn them over, unless they receive a release of the levy directly from the IRS within the 21 days.  Click here for horror stories concerning parties who failed to timely turn over levied funds.

This is a typical situation where the revenue officer knows better, but proceeds with collection activity anyway, hoping that the taxpayer will get discouraged jumping through all the administrative red tape necessary to get the levy released. 

I called the revenue officer who issued the levy.  She has built up enough government accrued vacation, etc. to take off virtually the entire 2nd half of December for the holidays.  I called her supervisor to start a Collection Appeals Program (CAP) request.  The CAP request must be signed off on by the direct supervisor.  Her supervisor is similarly out for the holidays.  I then received a call back from another supervisor, who was helpful, but resistant to release the levy without hearing the revenue officer's reasons for issuing the levy.

This supervisor said that we could wait another 6 days, until next Tuesday (when the R.O. and her immediate supervisor were back from vacation), thus delaying the signature we desparately need in order to move on the CAP appeal and get a decision before the bank must turn over the money.  I declined and politely asked her to process the appeal.

"Please have the supervisor's supervisor call me after my rights have expired, ok...?"

If you got tired just mentally running the laps I just illustrated, you are not alone.  This is just another day at the IRS collection center.  Life is too short to deal with these headaches on your own.  If your bank account is being levied, call a local lawyer to go to bat for you. Call me at 1-800-721-7054 today. 

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