When the Texas Comptroller issues a bank levy, the bank must turn over funds in your account up to the amount of your tax debt. Unlike a freeze, which holds funds temporarily, a levy actually takes the money. Defending against levies requires acting quickly and strategically.
Timing is everything. Banks typically have a short window between receiving levy instructions and turning over funds. If you learn about a levy before the bank processes it, you may be able to negotiate a release. Once the funds are gone, recovery is much more difficult.
Contact the Comptroller immediately upon learning of a levy. Explain your situation and what you can do to resolve the debt. If you can enter a payment arrangement or make a substantial payment, the Comptroller may release the levy and return funds that haven’t yet been processed.
Demonstrate hardship if the levy threatens essential needs. Business levies that prevent payroll or rent payments may be releasing if you can show the levy would cause the business to fail, ultimately reducing what the Comptroller could collect. Personal levies affecting basic living expenses may similarly warrant release.
Challenge the underlying assessment if it’s incorrect. Levies based on erroneous assessments shouldn’t proceed. File a formal dispute and request that collection be suspended while the dispute is resolved. If the assessment is reduced or eliminated, levied funds should be returned.
Identify exempt funds in the levied account. Certain income sources, including Social Security and some retirement benefits, are protected from levy under federal law. If exempt funds were taken, you can claim them back.
Establish a payment arrangement to prevent future levies. The Comptroller levies accounts because voluntary payment hasn’t happened. Getting into a sustainable agreement, and staying current on it, prevents future levy activity.
Consider broader financial issues if levies are part of a larger debt picture. If you owe multiple creditors and can’t satisfy all of them, you may need to consider more comprehensive solutions like bankruptcy or negotiated settlements.
Levies are among the most aggressive collection tools available. If you’re facing levy activity, contact us immediately to protect your assets.
