Massachusetts Bank Levy Checklist: Understanding
State Enforcement Action
What a Bank Levy Means
A bank levy is a legal enforcement action where the Massachusetts DOR seizes funds directly from your bank account to satisfy unpaid state taxes. The Massachusetts Department of
Revenue has legal authority under Massachusetts General Laws Chapter 62C to collect delinquent taxes through this process. This action occurs after you fail to pay within ten days of receiving a formal demand for payment. The levy represents direct collection action, meaning the state moves beyond notices and takes funds without requiring your permission or further court action.
Why Massachusetts Issues Bank Levies
The state issues a Notice of Levy when you owe unpaid state taxes and have not responded to the required demand for payment. Massachusetts law requires the Department of Revenue to issue a demand for payment before proceeding with levy action.
If you neglect or refuse to pay within ten days after this demand, the Commissioner of Revenue may legally collect the tax through levy on your property, including bank account levies. The state’s authority to levy comes from Massachusetts General Laws Chapter 62C, Section 53, and is detailed in Directive 97-2, which grants specific collection powers for delinquent tax obligations.
What Happens During the Levy Process
When your bank receives the Notice of Levy, it must match your name or taxpayer identification number against all accounts where your information appears, including joint accounts. The bank immediately imposes a hold on funds up to the amount of the levy, plus interest and penalties.
Massachusetts law requires a mandatory 21-day holding period during which no withdrawals are permitted from the affected accounts. After the 21-day period expires, the bank must surrender the held funds to the state on the first business day unless the levy is released or extended by the Commissioner.
Duration and Scope of the Levy
The levy remains in effect for 60 days from the date it is first served on the financial institution under 830 CMR 62C.55A.1. During this period, the levy applies both to funds already in your account when the levy was received and to any deposits made during the 60 days.
The levy amount includes the tax debt owed, plus any additional sum sufficient to cover the expenses of the levy. Massachusetts law allows the Commissioner to issue subsequent levies if the initial levy does not satisfy the full amount owed, meaning multiple bank account levies may occur until the debt is paid.
Property Subject to Massachusetts Tax Levy
Massachusetts tax levy authority extends beyond standard checking and savings accounts to reach various assets held by financial institutions. The state can levy mutual fund accounts, safe-deposit box contents, retirement accounts not protected by federal law, and trust accounts that become payable during the levy period.
Property exempt from levy includes supplemental security income, certain federal pension benefits protected by federal laws, unemployment compensation, and amounts necessary to comply with existing child support obligations under a court order. These exemptions are specifically detailed in Massachusetts General Laws Chapter 62C, Section 55A, and taxpayers claiming exempt property must follow proper procedures with the Massachusetts DOR.
Step-by-Step Checklist After Receiving Notice
Step 1: Review the Notice of Levy Documentation Immediately
Examine all levy documents to identify the tax years owed, the total amount including interest and penalties, any response deadlines, and Massachusetts DOR contact information provided on the notice.
Step 2: Gather Supporting Tax Records and Banking Information
Collect all prior notices from the state, copies of filed tax returns for relevant years, records of payments made, banking information showing deposits and withdrawals, and any previous correspondence with the Department of Revenue.
Step 3: Verify the Debt Amount and Check for Errors
Compare the amount stated in the Notice of Levy against your records to identify any discrepancies between what the state claims you owe and what your documentation shows you have paid.
Step 4: Contact the Massachusetts DOR Collections Bureau Immediately
Call the Department of Revenue Collections Bureau at the number provided on the levy notice to confirm your current balance, discuss available payment options, and inquire about relief programs that may apply.
Step 5: Ask About Payment Agreement Options
Inquire whether setting up a Payment Agreement or installment arrangement could stop or release the levy, and ask what steps are required to establish a formal payment arrangement with the state.
Step 6: Explore Alternative Resolution Options
Ask the Massachusetts DOR about Offer in Compromise programs if you cannot pay the full amount, hardship status if the levy threatens your financial well-being, or penalty abatement if you qualify for relief.
Step 7: Document All Communications with Collection Agents
Record the date, time, and names of collection agents or representatives you speak with, note what was discussed, and keep confirmation numbers or reference numbers provided during conversations with the Department of Revenue.
Step 8: File a Dispute if the Levy is Incorrect
If you believe the debt is incorrect, ask about the formal dispute process under the
Massachusetts Consumer Debt Collection Act, required supporting documentation, and the deadline for submitting your objection to the levy.
Step 9: Monitor Your Bank Account Activity During the Holding Period
Check your account during the 21-day holding period to confirm whether the levy was processed, note the date funds were transferred, verify the amount taken, and document your remaining account balance.
Step 10: Obtain Post-Levy Documentation and Confirmation
Request confirmation from the Massachusetts DOR that the surrendered amount was received and applied to your account, verify the new balance owed, including remaining interest and penalties, and determine next steps.
Step 11: Consider Professional Assistance if Needed
Contact a Tax Attorney or Certified Tax Resolution Specialist if the levy involves complex issues, multiple tax years, or if you need personalized advice on negotiating with the Massachusetts
DOR for debt resolution.
- Ignoring the Final Notice of Intent to Levy: Failing to respond within 10 days of
- Assuming incorrect debt without verification: Disputing the amount without gathering
- Missing the 21-day holding period: Not acting during the 21 days when your bank
- Failing to document communications with collection agents: Not keeping records of
- Not following through on Payment Agreement terms: Arranging an installment
- Not seeking professional assistance when needed: Attempting to negotiate complex
- State tax notice review and response
- Penalty and interest reduction options
- Payroll and trust fund tax assistance
- Payment plan and relief eligibility review
- Representation with state tax agencies
Step 12: Follow Up on Remaining Balance and Enforcement Actions
Contact the Department of Revenue after the levy to determine whether additional payments are required, whether any further enforcement actions, such as a Wage Levy or tax lien filing, are pending, and what options remain for resolving any balance.
Understanding Related Enforcement Actions
The Massachusetts DOR uses multiple collection tools beyond bank account levies to collect tax debt. A Wage Levy, also called an Order to Withhold, allows the state to take a portion of your wages or salary directly from your employer until the debt is paid. The state may also file a tax lien, which is a public record that attaches to your real estate and personal property and may affect your credit reporting with credit bureaus.
Additional enforcement actions include suspending your driver’s license, intercepting your tax refund, and placing holds on lottery payout winnings. Understanding these tools helps you recognize the urgency of addressing tax debt before enforcement escalates.
Common Mistakes to Avoid receiving the formal demand for payment allows the state to proceed legally with a levy against your accounts. documentation wastes time; you must provide records proving why the assessment is wrong before the Massachusetts DOR will review your claim. holds the funds eliminates your opportunity to arrange Payment Agreement options or request a levy release before funds are transferred to the state. conversations with the Department of Revenue creates problems if disputes arise later about what was agreed upon or what relief options were discussed. agreement but missing scheduled payments results in default, immediate cancellation of the contract, and resumption of enforcement actions, including additional bank account levies or Wage Levy issuance. tax debt issues without consulting a Tax Attorney or tax professional may result in missed opportunities for an Offer in Compromise or other favorable resolutions.
What Happens After Levy Completion
After the bank transfers funds to the state, the Massachusetts DOR applies the payment to your account and adjusts your balance accordingly. If the levy satisfied the full debt, including interest and penalties, you should receive confirmation that your account is resolved. If a balance remains, the state may continue collection efforts, including additional bank account levies,
Wage Levy actions, or filing a tax lien against your property.
You retain the right to contact the Massachusetts DOR to discuss remaining balances, establish
Payment Agreement arrangements, request Offer in Compromise consideration, or apply for hardship relief even after a levy has been processed and funds transferred.
Protecting Your Financial Well-Being
Taking prompt action after receiving a Notice of Levy protects your financial well-being and preserves options for resolving tax debt on favorable terms. The 21-day holding period provides a critical window to negotiate with the Massachusetts DOR, arrange payment plans, or demonstrate that levied funds are legally exempt.
Seeking personalized advice from a Tax Attorney or Certified Tax Resolution Specialist ensures you understand all available options and make informed decisions. Remember that state laws provide specific taxpayer rights and protections, and professional assistance can help you navigate the collection process while minimizing financial disruption to your household and maintaining compliance with your tax obligations.
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