If you are curious about how does the IRS find your bank account to recover back taxes through a bank levy, this article will be insightful. Read to know how IRS sleuths get hold of the checking bank accounts of tax payers.
As they say, only two things are inevitable and inescapable in life – death and taxes! In USA, one could say that a third inescapable entity is the Internal Revenue Service (IRS), responsible for filling the government’s coffers and putting erring tax payers in line. Armed with the legal machinery and rights granted by the federal government, IRS can impose levies on your property and bank accounts to recover tax debt.
About IRS Bank Levy
Before we talk about ways in which IRS can get hold of your bank account, let us examine the consequences if indeed your bank account is located by them. In case you have already been served with notices for delayed tax payment which you have consistently ignored for a long time, the IRS holds the right to get information about the balance in your bank accounts and impose a levy on them for recovery.
21 days after the imposition of the tax levy, the amount of balance that you owe the IRS is deducted directly from that account and deposited in the government coffers. Since IRS has access to the personal and financial information database of all US citizens, finding a bank account of any defaulting tax payer is easy. Let us see the various ways in which IRS can get hold of your bank account information.
How Does the IRS Find Your Bank Account?
Any financial trail that begins from your bank account, can be traced back to the source. Here are the various trails that can lead the IRS to your bank account.
Through Tax Refunds
If you have ever applied before for a tax refund from the IRS on the basis of deductions, you need to supply information about your bank account, where the refund is deposited. This information, once provided, is stored by the IRS for further reference in the future. So if you have claimed a tax refund before and gotten money transferred to it, IRS already knows about it.
Through Financial Audits
If you have been subjected to financial audits in the past, it’s mandatory that you disclose all the details of your financial status. This includes information about all your savings and the bank account numbers where you have them deposited. This information is stored in the IRS database, which they may access any time they need to, in the future.
By Tracking Your Social Security Number
Another way in which the IRS can track your bank account is by knowing your social security number. From your social security number, which is a prerequisite for opening an account in any bank, your account can be easily tracked by the IRS.
IRS hires the best accountants and they can utilize the federal machinery at hand and various information sources to get the bank account information of erring tax payers. Once the bank levy is imposed, after the last notice, you have no option but to pay your dues to get it removed. There is no point in working on hiding your bank account information. A much simpler thing to do is to just pay your taxes on time as otherwise, sooner or later IRS sleuths are going to come sniffing and get hold of your assets anyway. To avoid building tax debt, one of the simplest things to do is plan beforehand and ensure that you have enough savings to meet your tax obligations. Meet a tax consultant and know about the tax deductions which you are eligible for. To conclude, there is no point in hoping that IRS won’t find your money stashed away in some bank account. Pay your tax in full and on time and live carefree!