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Legal Guide posted originally to Avvo.com https://www.avvo.com/legal-guides/ugc/how-to-unfreeze-a-bank-account-that-the-irs-has-frozen

Research has proven that 89% of people fail to remit or respond to collection demands because they are unaware of various accounting and tax regulations. While this could be an innocent mistake for some people, it could attract the attention of the IRS, resulting in a bank account freeze.

The IRS could freeze your account for various reasons, from suspicious activity and bank secrecy violations to failure to remit taxes. Recovering your account could be a nightmare, particularly if you do not understand the law.

While unfreezing your account could seem straightforward, various steps go into it. You might also need a professional to facilitate this process. The following are in-depth insights into unfreezing such bank accounts and how to avoid the freezes.

What to Do If the IRS Freezes Your Bank Account

The IRS freezes your bank account for 21 days after unearthing violations and submitting notice. Your bank is expected to submit funds by the end of the 22nd day. For this reason, you must act within 21 days. Here are a few things to consider during this time.

Respond to the IRS

The IRS allows you to respond to the issues, preferably before they freeze the bank account. It sends a warning called a Notice of Intent to Levy, giving you 30 days to act and prevent the freeze. Responding to the IRS within the first 30 days is recommended, as it helps avert the freeze.

You’ll contact the IRS for two reasons. First, you need to understand the need for the bank account freeze, whether it is a secrecy violation, an accumulated tax debt, or suspicious activity. An elaborate statement allows you to take the necessary remedial measures.

Reaching out to the IRS will also give you insights into how to remedy the situation. The IRS will provide a detailed outlook of your case, indicating what measures you must take to avoid or eliminate the bank account freeze.

Hire an Expert

An excellent tax lawyer will help maneuver this problem, adequately addressing it to avoid further charges. This attorney will also highlight your rights and the necessary steps you must take. Often, you’ll rely on them to break down all the complex tax laws and regulations, including how much the IRS can take from your account at the expiry of the notice.

However, the lawyer you choose matters.

It would be best to consider an experienced and specialized attorney for the best results. With experience, an attorney shall help formulate a payment plan, lower the tax liability, or eliminate the problem.

How to Unfreeze an IRS-Frozen Bank Account

Everyone looks forward to seamless transactions, whether in business or for family use. Unfreezing your bank account is the first step towards this goal. There is no one-dimensional approach to unfreezing an IRS-frozen bank account. However, the following options suffice.

Clear Your Taxes

The IRS freezes your bank account over tax arrears. It would be best to clear them fully. This move cushions you against further charges, penalties, and levies.

Ask for An Installment Agreement

The tax arrears could be too huge to handle all at once. You could apply for an installment agreement to pay monthly installments. This payment plan uses a check-off system that guarantees convenience and flexibility. However, you must request an amount you can comfortably pay off monthly.

Offer In Compromise

An offer in compromise is an arrangement that allows you to settle your tax debt for less than the owed amount. This program is offered to individuals who cannot fully repay their debt. Often, the arrangement requires you to pay a particular percentage or amount, depending on the agreement.

Let a Tax Professional Help

An excellent tax professional could help negotiate with the IRS, significantly reducing or eliminating the payable amount. This expert leverages various loopholes in the law to ensure you get a fantastic deal.

Consequences of Not Unfreezing Your Account

What happens when you do not unfreeze your account? First, the IRS does not freeze your bank account. Instead, this freeze applies to the amount on your bank account at the time of the levy. This means any cash deposited after the freeze is accessible. However, the initial amount on the bank account will be turned over to the IRS on the 22nd day if you do not take action.

Suppose you do not unfreeze your account. Then, the amount turned over to the IRS will go into repaying your debt, charged interests, and penalties.

If this amount can fully cover the debt, the IRs will use only what it requires and return the remaining to your account. However, if the amount is insufficient, the IRS could go after your wages, properties, or any other source of income.

How to Prevent Your Bank Account From Being Frozen In the Future

A frozen bank account—a nightmare you’d never wish for! Taking preventive measures will cushion you against various inconveniences. You must take the following steps to protect yourself from these freezes.

Be Proactive

Pay your taxes on time! A tax expert will help you file your returns on time and correctly, avoiding any unwanted IRS intrusion in the future. At the same time, do not default on your OIC, as it could force the IRS to terminate the agreement and freeze the accounts once more.

Avoid Suspicious Activities

Your bank account will likely be frozen if you violate bank secrecy codes or engage in suspicious activities. Avoiding anything that could raise such suspicion will protect you against freezes in the future. 

Unfreeze Your Account Today

While you could take all the precautions above, a bank account freeze could be inevitable in some instances. There can never be a better time to reach out to us at Cumberland Law Group, LLC than this! We offer comprehensive tax law services, including guiding you through an IRS bank account freeze! Call us today for a free consultation!