A bank levy freezes the funds in your company’s bank account at the time the levy is processed by the bank. This could be your payroll, rent, supplies, or other expenses. A bank levy does not capture all the funds going into that account indefinitely. Once the funds are frozen, the bank holds the money in escrow essentially for a 21-day period before sending the funds to the IRS.
During this 21-day period, you have an opportunity to resolve your business account in another manner and have the bank funds returned to your account for company use. Once money has been sent to the IRS your chances of getting it back reduce significantly.
Accounts Receivables Levy
The IRS has the ability to issue levies to third parties that now owe or they have reason to think may owe your business money. Think of the impact that could have on not only your business cash flow, but also on relationships with your customers. How would it make you feel if you received a call from a customer saying they received notification that they are to send the IRS the money they owe you rather than sending it to you? In most cases, you had plans on what you were using that money for: payroll, supply purchases, office rent, payroll taxes.
These levies do not help your business get ahead of the tax debt. In fact, in most cases, they cause you to fall farther behind. But the IRS wants their money, and if you are not communicating and cooperating with them in order to make arrangements, then they are going to get their money in any legal manner they can.
The problem with a levy on accounts receivable is that it captures 100 percent of what it is you are owed at the time your customer receives the levy up to the extent that you owe back taxes. It is, in most cases, not ongoing and only a one-time levy, but the IRS can issue levies to the same customer repeatedly capturing your income from multiple sources month after month.
Seizure of Assets and Property
A levy can also include the seizure of your assets, including business investment accounts, credit lines and cash value of officer life insurance policies, as well as property, such as company equipment and cars.