Louisiana Bank Levy Checklist
A Louisiana bank levy occurs when the Louisiana Department of Revenue instructs your bank to freeze and transfer funds from your account to pay unpaid state taxes. Louisiana Revised Statute 47:1569 authorizes this action by giving the Department of Revenue legal authority to enforce tax collection through distraint and levy.
Understanding how Louisiana's bank levy process works is important because the state can freeze your account without advance notice to you, though your bank holds the funds for 10 days before transferring them to the state. The following guide explains what actually happens during a Louisiana bank levy and what options you have to address the situation.
What a Bank Levy Means
A bank levy means the Louisiana Department of Revenue has issued an Order to Withhold to your financial institution. Your bank receives this order and immediately freezes the funds in your account up to the amount of your tax debt.
Why the State Takes This Action
The Louisiana Department of Revenue uses bank levies to collect unpaid state taxes, penalties, or interest when taxpayers have not responded to earlier collection notices or have not paid assessed amounts. Louisiana law requires the Department of Revenue to send assessment notices giving taxpayers 60 days to pay or appeal before the assessment becomes final.
What Happens During and After a Levy
Once your bank receives an Order to Withhold, the institution freezes the available funds in your account as of that moment. The bank holds these frozen funds for exactly 10 days before transferring them to the Louisiana Department of Revenue to apply toward your outstanding tax debt.
What This Does Not Mean
Receiving a bank levy does not mean you have been convicted of a crime or that criminal charges have been filed against you. The levy also does not mean you have lost all rights to address the underlying tax debt or to request payment arrangements going forward.
What To Do After a Bank Levy Occurs
Step 1: Contact your bank immediately to confirm the levy details.
Call or visit your bank as soon as you learn about the levy. Ask which account was affected, what date the Order to Withhold was received, how much was frozen, and when the 10-day holding period ends. Request written documentation showing the levy date and amount. Keep this documentation with your tax records because you will need it when you contact the state.
Step 2: Gather your Louisiana tax records.
Collect your state tax returns for all years mentioned in any previous notices from the Department of Revenue. Find payment receipts, cancelled checks, or bank statements showing payments you made to the state.
Step 3: Contact the Louisiana Department of Revenue Collections Division.
Call the Department of Revenue at 1-855-307-3893 to discuss your account. You can also email business tax questions to business.tax@la.gov or individual income tax questions to income.tax@la.gov.
Step 4: Verify the accuracy of the tax debt.
Compare the amount the state says you owe with your own tax records. Check whether the Department of Revenue has credited all payments you made. Review whether the tax assessment itself is correct based on your filed returns or whether you believe the assessment contains errors. If you find discrepancies, explain them to the state representative and provide documentation supporting your position.
Step 5: Request a lien payoff amount if a lien has been filed.
Louisiana Revised Statute 47:1577 provides that tax debts automatically operate as a lien on all of your property. If the Department of Revenue has recorded a formal Notice of State Tax Lien in your parish, you need to know the full payoff amount to get the lien released.
Step 6: Explore payment plan options if you cannot pay in full.
Louisiana allows taxpayers to enter into installment agreements through the LaTAP system. You will make monthly payments for the duration of the plan, and interest and penalties continue to accrue on unpaid balances. Visit LaTAP to request a payment plan online. Be prepared to provide information about your income and expenses if the Department of Revenue requests it.
Step 7: Consider whether you qualify for an Offer in Compromise.
Louisiana offers an Offer in Compromise program for taxpayers who cannot pay their full tax debt. This program allows you to settle the debt for less than the full amount owed if you can demonstrate doubt as to collectibility or significant financial hardship.
Step 8: Check whether exempt funds were levied.
Certain types of income may be protected from levy under federal or state law. Social Security benefits, veterans’ benefits, and some other government payments may have protection, though the rules are complex.
Step 9: Prevent future levies by staying current.
Once you have addressed the current levy, take steps to prevent future collection actions. File all required Louisiana tax returns on time, even if you cannot pay the full amount. Pay as much as you can when you file to reduce penalties and interest. Keep your address current with the state so you receive all notices they send.
Step 10: Keep detailed records of all communications and payments.
Save copies of all letters you send to or receive from the state. Keep receipts for all payments you make, including the date, amount, and method of payment. Take notes during phone calls, including the date, time, name of the person you spoke with, and what was discussed. Store bank statements showing the levy and any subsequent deposits or withdrawals.
Common Mistakes to Avoid
Waiting to contact the state after a levy occurs reduces your options and may result in additional collection actions before you can arrange a resolution. Assuming the levy amount is wrong without checking your actual tax records and payment history wastes time you could use to negotiate payment terms.
Failing to respond to assessment notices before they become final eliminates your opportunity to dispute the amount before collection begins. Moving all money out of levied accounts without addressing the underlying tax debt does not resolve the problem because the state can identify other accounts or use wage garnishments to collect.
Frequently Asked Questions
Can Louisiana levy my entire bank account?
The state freezes funds up to the amount of your outstanding tax debt, including penalties and interest. If your account balance exceeds what you owe, the excess remains available to you after the 10-day holding period ends.
What if I need money from my account for essential expenses?
Contact the state immediately and explain your financial situation. The state has discretion to consider hardship circumstances, though relief is not automatic and depends on your specific facts.
Can I stop a levy after the 10-day period has ended?
Once your bank transfers the funds to the state, you typically cannot reverse the levy. You can request a refund if the levy exceeded your actual debt or if exempt funds were taken.
How do I know if a lien has been filed against my property?
Check with the Clerk of Court in the parish where you own property or where you reside. You can also contact the state and ask whether any liens have been recorded against you.
A Louisiana bank levy represents serious tax collection enforcement, but it does not eliminate your options for resolving the underlying tax debt. Contacting the state promptly after a levy occurs allows you to verify the debt amount, discuss payment arrangements, and prevent additional collection actions.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance
