In general, the IRS can levy a joint bank account if one account holder has delinquent tax debt and all other required procedures have been followed. This is true whether the joint account holder is your spouse, relative, or anyone else.
Joint Bank Account Levies
It doesn’t matter whose funds were placed into the account. Under the Internal Revenue Manual, the IRS levy can attach to a bank account for which the taxpayer has an unrestricted right to withdraw funds, regardless of who deposited those funds.
For example, consider a son who has a joint checking account with his mother. The mother deposits all of the funds in the account, but the IRS can seize those funds to collect delinquent tax debt incurred by the son. The full balance of the account can be seized up to the amount of back taxes, penalties, and interest owed to the IRS.
If you owe the IRS money and a levy may be issued, you should notify your joint account holder that their funds could be seized to pay off your tax debt.
Joint vs. Separate Tax Debts
The above rules apply whether the tax debt was for a joint return or not. However, if your tax debt is from a separate return and you are now married, different rules apply to your spouse’s responsibility for your tax debt.
In non-community property states, your spouse’s separate property can’t be seized because of your tax debts. Their separate bank accounts and wages can’t be levied to pay tax debt from your separate return. Different rules apply in community property states.
You can file an injured spouse allocation if your joint tax refund was seized to pay off your spouse’s separate tax debt. You’ll only be able to get the portion of the refund attributable to your tax items.
However, if the tax debt is from a joint return, then the IRS can come after your separate property, your spouse’s separate property, your joint accounts, or all of the above.
IRS protocol is to generally garnish the wages of the higher earning spouse in these cases, but both spouses can have their wages levied if you fail to cooperate with the IRS.
You can avoid IRS seizures by contacting a tax resolution attorney and developing a proactive solution to your tax problems.
The Gartzman Law Firm offers tax settlement help for both federal and state tax debt. Use our contact form to request a consultation with an Atlanta tax resolution attorney.