Montana Bank Levy Checklist
State enforcement through bank levy occurs when the Montana Department of Revenue takes action to collect unpaid taxes directly from your bank account. This is a civil collection action, not a criminal prosecution or asset seizure. Montana uses specific legal mechanisms and terminology that differ from federal procedures, and understanding these processes helps you respond effectively to protect your rights.
Understanding Montana’s Enforcement Process
Montana uses a two-step enforcement process for collecting unpaid state taxes. The Montana
Department of Revenue first files a Warrant for Distraint in district court under Montana Code
Annotated 15-1-701, which creates a tax lien against your real and personal property, bank accounts, wages, and investments.
This warrant functions as a judgment lien enforceable for 10 years from its creation date. After filing the warrant, the Department executes it by issuing an Order to Withhold to your bank, which is Montana’s official term for a bank levy.
An Order to Withhold directs your financial institution to freeze and hold funds in your account for 10 days before transferring them to the state. During this 10-day holding period, you have a brief window to take action.
Wage garnishment affects paychecks and disposable earnings, while an Order to Withhold targets bank accounts. In contrast, the underlying Warrant for Distraint represents the tax lien itself filed in court.
Why Montana Issues These Orders
The Department issues a Warrant for Distraint bank account enforcement when you have failed to pay taxes owed and have not responded to earlier collection notices or payment demands.
State tax law authorizes the Department to pursue collection through this formal legal process when standard billing and collection letters have not resulted in payment of past-due tax balances. Once filed in any Montana county, the warrant has statewide effect, meaning the tax levy can reach your accounts regardless of where you or your bank are located within the state.
Consequences of Ignoring the Order
If you receive an Order to Withhold and take no action, your bank will transfer the frozen funds to the state after the 10-day holding period expires. The Department may issue additional
Orders to Withhold against other bank accounts you hold to satisfy delinquent debts.
Montana DOR bank levies are difficult to release, and in most situations, a release is not possible even after establishing payment arrangements. Unpaid tax balances continue accruing interest and penalties, and the district court filing of the Warrant for Distraint remains a public record affecting your credit and property transactions.
What This Does Not Mean
An Order to Withhold does not mean you face criminal prosecution or jail time for owing taxes.
This is a civil collection action under Montana’s tax enforcement statutes.
The order does not automatically seize all your assets; it applies only to funds in the specific account named in the order. You have not lost your right to claim exemptions for protected funds or to dispute the underlying tax debt through Montana’s administrative appeal process.
Initial Response Steps
Follow these actions immediately upon receiving notice
1. Locate the official Order to Withhold from the Montana Department of Revenue and read it completely, including all dates, amounts, account information, and instructions.
2. Identify which tax period the order relates to and verify the total amount the state claims you owe in past-due tax balances.
3. Review your records to confirm whether you believe this tax debt is correct by checking past tax returns, payment records, and any prior notices from the state.
4. Contact the Montana Department of Revenue Collections Services Bureau at (406)
444-6964 or via email at DORCollections@mt.gov to confirm the order is active and request a detailed account statement showing current tax balances.
Determine your current financial situation by reviewing all bank balances and documenting essential monthly expenses, including housing, utilities, food, and medical costs. Calculate your disposable earnings after mandatory deductions to assess your ability to pay.
Identify whether funds in your account may be exempt from seizure under Montana law. You have only 10 business days from receiving notice of the levy to file a Notice of Claimed
Exemption with the district court to protect exempt funds such as Social Security, SSI, disability benefits, or public pensions.
Filing for Exemptions
Montana law protects certain types of income and funds from execution under Montana Code
Annotated 25-13-212. Protected funds typically include Social Security benefits, Supplemental
Security Income, Social Security disability payments, public pensions, and amounts necessary for basic living expenses based on federal minimum wage calculations. To claim these exemptions, you must file paperwork with the court within 10 business days of receiving notice of the levy.
The district court must conduct a hearing within 10 days (excluding weekends and holidays)
from receiving your exemption request. Gather documentation proving the source of the funds in your account, such as deposit records, benefit statements, or bank statements showing direct deposits.
Submit your Notice of Claimed Exemption to the court that has jurisdiction over the Warrant for
Distraint. Missing this deadline results in the funds being transferred to the state without the opportunity to reclaim exempt money.
Montana’s Administrative Appeal Process
Montana provides a clearly documented three-step administrative appeal process for tax disputes. Step one requires you to file a Request for Informal Review using Form CB-1 for collection matters within 45 days of receiving the Department’s notice.
A supervisor will review your case and issue a written final determination within 45 days. Step two allows you to file a Notice of Referral to the Office of Dispute Resolution using Form CB-2 within 45 days of receiving the informal review decision.
An Administrative Law Judge will hear your appeal and issue the Department’s final agency decision. Step three permits you to appeal to the Montana Tax Appeal Board within 30 days of receiving the final agency decision.
Contact the Collections Services Bureau at (406) 444-6964 to discuss your options for disputing the debt or arranging payment. Prepare written documentation explaining your position and include supporting records such as prior tax returns, payment confirmations, or correspondence from the Department.
Payment and Hardship Considerations
Montana Department of Revenue has no non-collectible status or hardship policy for state taxes. Currently Not Collectible status is a federal IRS program only and does not apply to
Montana state tax debts.
If you cannot pay the full amount immediately due to financial hardship, contact the Collections
Services Bureau to discuss Installment Agreement options. An Installment Agreement allows you to make monthly payments over time, though interest continues accruing on unpaid balances.
Payment arrangements through an Installment Agreement may be available, though they typically do not result in immediate release of the Order to Withhold. Request an Installment
Agreement in writing and provide financial documentation showing your disposable earnings and monthly expenses to demonstrate your payment capacity.
Critical Documentation Requirements
Maintain detailed records of every communication with the Collections Services Bureau, including dates, times, representative names, and discussion summaries. Save copies of all written correspondence you send or receive, along with proof of mailing for documents submitted.
Store payment confirmations, exemption filings, court documents, and the original tax lien filing for at least three years. Document your bank account balances before and after the freeze to track what funds were held.
Common Mistakes to Avoid
Never ignore the Order to Withhold, as the 10-day holding period expires quickly and funds will transfer automatically. Do not miss the 10-business-day deadline for filing exemption claims if you have protected funds in your account.
Avoid providing incomplete information when responding to the Department or filing exemption paperwork. Do not assume a payment plan will release the levy, as Montana DOR bank levies rarely release even with payment arrangements in place. Failing to respond promptly prevents you from establishing an Installment Agreement or demonstrating financial hardship before collection action proceeds.
Facing State Enforcement or Payroll Tax Issues?
If you’ve received a state tax notice and aren’t sure how to respond, we can help you review your options and next steps.
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