Yes, they cannot only your bank account but any retirement account like IRA’s and even any cash value you have in a life insurance policy. This actual act of taking your money is called a levy and it’s basically the big brother of a lien. The difference is that when the taxing authorities put a lien on any assets you may have, they are holding them as security or collateral for any tax liabilities you own. This action prevents you from the selling, using or the disposal of any of these liened items or accounts. While a lien basically ties your assets up so you can’t use them a levy physically takes those assets to pay down any encumbrances you may have with the taxing authority. Once again I must stress that this event came about because you weren’t proactive in your relationship with the IRS. You, unless you were homeless and in the streets, were notified of the taxing authority intent several times by mail and phone that a lien and then a levy was going to be applied to your bank account.
As I’ve said many times in this forum you could have prevented this experience from even happening by simply contacting me and together we would have halted any levies on your cash accounts. And, as troubling as the situation now seems, together we can have the levy removed if you’ll contact us so we can effectively plan your plea approach. You undoubtedly received a series of letters telling you that you owed taxes and you were required to discharge these assessments by a certain date. That’s when you should have taken some type of action even if it was just to contact the IRS and ask how you could pay your liabilities but you didn’t. Some weeks later you received notification that a levy was going to be placed on your tax accounts and that you could contact the taxing authority to set up a hearing within the next 30 days. But you procrastinated and now the taxing authority has actually locked up your bank account and has ordered the bank to send the total amount of back taxes you owe or everything in your account except $1 if you don’t have the funds to pay in full. The bank has 21 days to comply and forward all the requested balances unless they are already tied up by previous court orders.
Banks are not limited to the regular on the corner type but include credit unions, trusts companies and employee or labor credit unions. The taxing authority can even attach funds you have in escrow as when you’re purchasing a home, business or property in some cases. The best advice is that if you even think the taxing authorities are going to place a lien or levy on your cash accounts is to empty them and either put the proceeds under your mattress or have a friend hold them for you so the IRS can’t get to them. And remember any checks you’ve written or automatic payment schedules you’ve set will not be honored even if they are dated before the levy but weren’t transferred or cashed.