Kentucky Bank Levy Checklist

levies (freezing funds in your bank accounts), property liens (a claim against your home or other personal property), and business license suspension or revocation. At this stage, the state has typically already sent you a Notice and Demand for Payment and given you time to respond or arrange payment. Enforcement represents the department moving forward with collection without waiting for your voluntary payment.

Why the State Issued This or Requires This

The Kentucky Department of Revenue initiates enforcement when a taxpayer owes unpaid income, sales, or other state taxes and has not responded to prior collection efforts. Common triggers include filing a tax return but not paying the amount owed, failing to file a return altogether, ignoring notices sent to your address on file, or missing deadlines on a payment arrangement. In many cases, the state sends multiple notices before beginning enforcement.

These notices give you opportunities to pay, set up a payment plan, or provide documentation of financial hardship. When those notices go unanswered, or deadlines pass without payment or contact, the Division of Collections moves to enforcement measures. The specific internal process for determining when to escalate from notices to enforcement is not detailed in public state guidance.

What Happens If This Is Ignored

If you ignore a collection action, the state will typically move forward with enforcement measures already authorized. These can include taking money directly from your wages through garnishment, freezing funds in your bank accounts through a Kentucky bank levy, placing tax lien claims against your property, or suspending your business licenses. The state may also pursue multiple enforcement actions simultaneously.

Each action adds complications to your financial situation and creates additional notices and documents you will need to manage. Ignoring enforcement notices does not stop the collection process; it allows it to continue. The longer enforcement continues without resolution, the more difficult and expensive it becomes to resolve the underlying tax debt.

What This Does NOT Mean

State enforcement does not mean you have committed a crime or are under criminal investigation. Unpaid taxes are a civil matter handled by the Revenue Department's

Division of Collections, not the criminal justice system. Enforcement also does not mean the state has seized all your property or frozen all your assets; the state uses specific, targeted enforcement tools, and there are limits on what they can take.

Additionally, receiving an enforcement notice does not mean that settlement or negotiation is impossible. The state offers payment plans, hardship relief, and other options even after enforcement has begun. What has not happened yet is a court judgment, though enforcement is a step toward that possibility if the debt remains unresolved.

Checklist: What to Do After Receiving or Identifying a

State Enforcement Action

Step One: Locate and gather all state enforcement documents

Find any recent notices from the Kentucky Department of Revenue marked "enforcement," "levy," "garnishment," "lien," or "collection action." Look for any notices

regarding wage garnishment, bank levies, business license suspensions, or property liens. Keep these documents in one safe place where you can easily reference them.

Step Two: Read the enforcement notice carefully for specific information

Identify the tax year or period the debt relates to. Note the total amount owed, including any penalties or interest listed for your overdue taxes. Find the specific enforcement action being taken (wage garnishment, Kentucky bank levy, tax lien, license suspension, or another action). Look for any deadline dates mentioned in the notice, as these are critical to protecting your appeal rights.

Step Three: Verify the debt information is correct

Check whether you recognize the tax year and amount owed for your tax obligations.

Confirm that you did not already pay this tax debt. Look for any apparent errors in the amount, tax type, or tax year. If information appears wrong, note the specific discrepancies so you can address them with the Department of Revenue.

Step Four: Contact the Kentucky Department of Revenue

Call the Department of Revenue at the phone number listed on the enforcement notice.

If no number is on the notice, contact the main Department of Revenue line to reach the

Division of Collections. Explain that you have received a collection action and want to discuss your account. Provide your Social Security Number or business tax identification number when asked.

Step Five: Ask about available options

Inquire whether a payment plan is available for your tax debt. Ask about hardship relief or other assistance programs if you are experiencing financial hardship. Find out whether the enforcement action can be paused while you arrange regular payments—request written information about any options discussed during your call.

Step Six: Inquire about the status of previous notices

Ask why earlier notices or payment opportunities were missed. Ask whether you can request a review of penalties or interest if you have documentation of a financial crisis or hardship. Find out whether any previous contact attempts or payment arrangements are on file in your account history.

Step Seven: Request written communication of all information discussed

Ask the department to send written confirmation of any options, deadlines, or arrangements discussed by phone. Confirm the address where payment or further

communication should be sent. Ask for the direct phone number or contact information of the person or department handling your account for future reference.

Step Eight: Document the date, time, and details of your contact with the state

Write down the date and time you called. Note the name of the person you spoke with, if provided. Record what options were discussed and any deadlines mentioned. Save any written confirmation the state sends you, as this documentation protects your interests and preserves your appeal rights.

Step Nine: If you have a payment plan or arrangement, follow it exactly

Make all regular payments on the dates agreed. Pay the exact amount specified in the agreement. Keep proof of each payment (bank statements, cancelled checks, payment receipts). If you cannot make a payment, contact the state immediately before the due date to discuss your options.

Step Ten: If you dispute the debt or enforcement action, request a hearing or review

Ask whether you can request a formal review or hearing to dispute the debt amount or collection action. Find out what documentation you need to provide for a dispute. Ask for written instructions on how to request a review and any deadlines for doing so, as missing these deadlines may eliminate your appeal rights to challenge the debt.

What Happens After This Is Completed

After you contact the Kentucky Department of Revenue regarding the enforcement action, the state will typically offer options for resolving the tax debt. If you arrange a payment plan, the enforcement action may be paused or adjusted to reflect the new arrangement. If you do not contact the state or do not respond to offers of payment arrangements, the collection action will continue as authorized.

The state will send written confirmation of any new arrangement, and you will receive notices about your account status going forward. The timeframe for processing your contact and responding with options varies depending on the specific situation and current department workload. You should receive written information about the next steps within a reasonable time after your contact.

Common Mistakes to Avoid

Missing the deadline to respond to enforcement notices: The longer you wait to contact the state, the closer you move toward additional collection efforts. Respond as soon as you identify a collection action.

Ignoring the enforcement action while hoping it goes away: Enforcement does not stop on its own. The state will continue collecting through the authorized method until the tax debt is paid, a payment plan is in place, or a formal dispute is resolved.

Not reading the enforcement notice carefully for specific information: Missing details about deadlines, amounts, or contact information can confuse and result in missed opportunities to resolve the issue and preserve your appeal rights.

Failing to follow a payment plan agreement exactly: If you arrange a payment plan, making late payments or payments in the wrong amount can result in the plan being cancelled and enforcement resuming.

Not documenting your contact with the state: Keeping records of whom you spoke with, when you called, and what was discussed protects you if there are later questions about what was agreed in the collection process.

Sending payment to the wrong address or department: Always confirm the correct mailing address or payment method with the Department of Revenue before sending money.

Not requesting written confirmation of any arrangement or option discussed

Verbal conversations can be misunderstood. Always ask for written confirmation of what was discussed and agreed upon.

Assuming the enforcement action means no negotiation or payment plan is possible: Even after enforcement begins, the state typically offers payment plans and other options. Contact the department to ask about these possibilities.

Frequently Asked Questions

What is a Kentucky bank levy, and how does it work?

A Kentucky bank levy is a specific enforcement action where the state freezes funds in your bank accounts to satisfy unpaid tax debt. Under Kentucky law, the Department of

Revenue must provide written notice to you at least 30 days before executing a bank levy. This advance notice gives you time to pay the tax, arrange a payment plan, or challenge the levy if you believe it is incorrect.

Are certain types of income protected from bank levy?

Yes. Certain federally protected funds deposited in your bank accounts may be exempt from levy, including Social Security benefits, unemployment benefits, and certain disability payments. However, the protection of these funds depends on proper identification and documentation with your banking institutions. Contact the Department of Revenue if you believe your account contains only protected funds.

Can I dispute the debt amount shown on an enforcement notice?

Yes. You can request a review or hearing to dispute the debt, which preserves your appeal rights. Ask the Department of Revenue about the specific process for filing a dispute and any deadlines for doing so. Documentation supporting your dispute (such as proof of payment or copies of your filed tax return) should be provided with your request.

What if I cannot afford to pay the tax debt?

Contact the Kentucky Department of Revenue to discuss your financial hardship. The state offers payment plans for taxpayers who cannot pay in full. In some cases, hardship relief or other assistance may be available. In certain circumstances, you may qualify for an Offer in Compromise, which allows you to settle your tax debt for less than the full amount owed.

Can the enforcement action be paused while I arrange payment?

Yes. Contact the Department of Revenue and explain your situation, including any financial hardship you are experiencing. The state may agree to pause enforcement while you work out a payment arrangement. This is typically handled on a case-by-case basis. Making contact and being honest about your situation gives you the best chance of working something out.

How is a state bank levy different from other collection actions?

A bank levy specifically targets funds in your bank accounts. At the same time, other collection actions may include wage garnishment (taking money from your paycheck), property liens (placing a tax lien on your personal property), or non-wage garnishment

(seizing other assets). Each type of collection action has different procedures and protections under Kentucky's garnishment statutes.

Facing State Tax Enforcement Action?

If you’ve received a notice related to sales tax or payroll tax enforcement and are unsure how to respond, our team can help you understand your options and next steps.

We help with

• 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

20+ years experience • Same-day reviews available