Illinois Bank Levy Checklist
Introduction
A bank levy is a state enforcement action that allows the Illinois Department of Revenue to freeze and collect money directly from your bank account to pay unpaid state taxes. The state uses this tool after other collection attempts have been unsuccessful.
Understanding how bank levies work and what triggers them is essential, as they can significantly affect your access to funds and your daily finances. Responding promptly to notices before a levy occurs can sometimes prevent this action from taking place.
What This Issue Means
A bank levy means the Illinois Department of Revenue has legally seized funds from your bank account to satisfy an unpaid state tax debt. The state sends a notice to your bank directing it to hold a specific amount of money and transfer it to the state. This is different from a payment plan or installment agreement—the state takes the money directly without your consent.
Why the State Issued This or Requires This
The Illinois Department of Revenue uses bank levies when a taxpayer has an outstanding tax debt and has not responded to earlier collection notices or payment demands. The state pursues this enforcement action after sending notices and allowing time for payment or response.
The state will notify you of the amount you owe at least 10 days before sending a levy. Under state administrative procedures, levies are among several tools available to collect unpaid state taxes.
What Happens If This Is Ignored
If a bank levy is already in place, ignoring it will not stop the state from collecting the frozen funds. Your bank must hold the levied funds for 20 days before transferring them to the Illinois
Department of Revenue to apply toward your tax debt.
If you receive a notice that a levy may occur and take no action, the state will likely proceed with the levy within the timeframe stated in that notice.
What This Does NOT Mean
A bank levy does not mean you have lost all your money or that your account is permanently frozen. The state can levy amounts that equal the past-due tax, penalty, and interest, but this does not include your entire account balance, regardless of the debt. This action also does not mean criminal charges have been filed or that you are being prosecuted—it is a civil collection procedure used by the state tax agency.
Checklist: What to Do After Receiving a Levy Notice or
Discovering a Levy
Step 1: Locate and Review the Notice
Find the notice from your bank or the Illinois Department of Revenue that explains the levy.
Read the entire notice carefully to identify the amount being levied. Note any deadline or timeframe mentioned in the notice for response. Keep the notice in a safe place for your records.
Step 2: Gather Information About Your Tax Debt
Collect any prior notices from the Illinois Department of Revenue related to unpaid taxes.
Identify the specific tax year or years involved in the debt. Note the original tax amount owed and any penalties or interest added. Write down the date you first received a notice about this debt.
Step 3: Contact the Illinois Department of Revenue
Call the Illinois Department of Revenue at 1-800-732-8866 or 217-782-3336 to verify the levy and the debt amount. Representatives are available Monday through Friday, 8:00 AM to 5:00
PM. Ask for a detailed breakdown of what is owed, including taxes, penalties, and interest.
Request written confirmation of the total debt and any amounts already collected.
Ask about payment plan or installment agreement options that may stop further collection action. TTY service is available at 1-800-544-5304, and over-the-phone translation services are available.
Step 4: Review Your Bank Account and Finances
Check your bank account to see if funds have been frozen or transferred. Review your account statements for the date the levy was processed. Note how much was levied and when the funds were transferred from your account. Determine whether the levy has impacted any checks or automatic payments.
Step 5: Understand the 20-Day Hold Period
Your bank will hold the levied funds for 20 days before forwarding them to the Illinois
Department of Revenue. This 20-day period provides you with time to contact IDOR, arrange payment plans, or resolve errors. After 20 days, the bank forwards the money to the state. Use this window to take action if you believe the levy is incorrect or if you can make alternative payment arrangements.
Step 6: Document All Communications
Keep copies of all notices, letters, and emails from the Illinois Department of Revenue. Write down the date, time, and name of any person you speak with at the department. Note what was discussed and any agreements or next steps mentioned. Save all documents related to this tax debt in one folder or file.
Step 7: Explore Payment or Resolution Options
Ask the Illinois Department of Revenue if you can enter into a payment plan to satisfy the debt.
Inquire about installment agreements that would allow you to pay the debt over time. Ask if any penalties or interest can be reduced or removed. Find out if there are any programs or options for taxpayers in financial hardship, such as filing a petition with the Board of Appeals.
Step 8: Address Any Accounting or Income Verification Issues
If you believe the tax debt is incorrect, gather documents that support your position. Collect receipts, tax returns, or other proof related to the income or deductions in question. Organize these materials chronologically or by category for easy reference. Be prepared to submit these documents if the department requests them.
Step 9: File for Relief If Applicable
Ask the Illinois Department of Revenue if you qualify for any form of relief or abatement. Inquire about penalty abatement if penalties were added to the original tax debt. Ask about hardship relief or programs designed to help taxpayers in difficulty, including the Board of Appeals process. Request information about forms or procedures for applying for any relief you may qualify for.
- Do not ignore deadlines stated in the levy notice.
- Do not assume the levy will go away if you ignore it—the state will collect the levied
- Do not submit a response without including all required information, such as your name,
- Do not throw away any notices or letters from the Illinois Department of Revenue, as you
- Do not submit unclear explanations about your tax situation—if you believe the debt is
- Do not assume one response or payment plan request is the end of the matter, as the
- Do not miss the 20-day hold period—this is your window to challenge the levy or make
- State enforcement notices and responses
- Sales tax audits, assessments, and collections
- Payroll & trust fund tax enforcement issues
- Penalty and interest reduction options
- Payment plans and state tax relief eligibility
- Representation before state tax agencies
Step 10: Follow Up on All Requests
Do not assume your request has been received if you do not get written confirmation. Call the
Illinois Department of Revenue to confirm that your request has been received and processed.
Track any deadlines mentioned in correspondence and respond promptly. Continue monitoring your account and communications from the state until the matter is resolved.
What Happens After This Is Completed
After you complete these steps, the Illinois Department of Revenue will review your information and respond to any requests you have made. If you submitted a payment plan request, the state will process it and send you a written decision regarding your case. If you contacted IDOR during the 20-day hold period to resolve errors or make arrangements, the state will work with you to address the issue before funds are transferred.
Common Mistakes to Avoid funds and apply them to your debt, and additional collection actions may follow. address, phone number, and the specific tax year or debt amount involved. may need these documents later. wrong, state the specific issue in simple, direct language. state may send additional notices that require action. arrangements before funds are transferred.
Frequently Asked Questions
Can the state levy my entire bank account?
The state levies amounts up to the total amount of past-due tax, penalties, and interest. If your account contains more than you owe, the levy is limited to the amount you owe. If your account balance is less than you owe, the entire balance may be levied. The levy amount is capped at the total debt owed, not your entire account balance.
How long does a bank levy last?
Once the state issues a levy, your bank must hold the levied funds for 20 days before forwarding them to the Illinois Department of Revenue. This 20-day holding period provides you with a
window to challenge the levy or make arrangements before funds are transferred. After 20 days, the bank forwards the money to the state.
Can I stop a levy that has already been issued?
If a levy has been issued and your bank is holding funds during the 20 days, contact the Illinois
Department of Revenue immediately to discuss payment arrangements or resolve any errors. If funds have already been transferred to IDOR after the 20 days, you cannot reverse the transfer, but you may request a review if you believe the levy was issued in error.
Will a levy affect my ability to pay other bills?
Yes. If funds are frozen or transferred from your account, you may not have access to the money needed for regular bills, rent, or other expenses. This is why responding to earlier notices before a levy occurs is important.
Do I need a lawyer to respond to a levy notice?
There is no requirement to have a lawyer. You can contact the Illinois Department of Revenue on your own to discuss the levy and your options. Some taxpayers choose to work with a tax professional or attorney, but it is not mandatory.
What is the difference between a levy and a lien?
A levy is an action that freezes and collects money from your account. A lien is a legal claim against your property. The state may use both tools, but they are separate actions with different effects.
Can the state levy my wages or salary?
Yes. The Illinois Department of Revenue can levy wages for unpaid state tax debt. Your employer must deduct up to 15 percent of your gross wages to pay your past due tax. The state will notify you of the amount you owe at least 10 days before sending a wage levy to your employer.
What if I have a payment plan with the state?
If you have an active payment plan and remain in compliance, a bank levy typically should not occur. However, if the state believes you have violated the agreement, a levy may still be issued. Contact the department immediately to discuss the situation.
Can I get the levied funds back if I pay the debt?
Once the state collects funds through a levy and transfers them after 20 days, they are applied to your tax debt. You cannot retrieve money that has already been transferred to the state and credited to your account.
Closing
A bank levy is a serious collection action, but receiving a notice about one does not mean you have no options. Understanding what a levy is, the 20-day hold period, and what steps are available puts you in a better position to respond.
By carefully reviewing your notice, contacting the Illinois Department of Revenue during the hold period, and documenting all communications, you can work toward resolving this issue. Taking action promptly—rather than ignoring the notice—is the most important thing you can do to protect your interests and finances.
Facing State Tax Enforcement Action?
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