Pennsylvania Notice of Bank Levy: What It Means and
What to Do
Introduction
A Notice of Bank Levy from the Pennsylvania Department of Revenue is a formal notice telling you that the state has ordered your bank to freeze or take money from your account to pay a tax debt. This notice is significant because it represents a serious enforcement action—the state has moved beyond sending bills and is now taking direct action to collect what you owe.
The notice informs you exactly what the state plans to do and provides a deadline to respond or resolve the debt before the levy is executed. Understanding what this notice states and your statutory rights can help you take control of the situation.
What This Notice Means
A bank levy is an order from the state tax department to your bank, instructing the bank to hold or transfer money from your account to pay your Pennsylvania tax debt. The notice you received is the state's official notification that this action is coming.
Pennsylvania law requires the Department to provide written notice of intent to levy, generally at least 10 days before the levy is executed, informing you of the amount due and providing an opportunity to resolve the debt. This represents one of the later stages of tax collection—it means the state has already tried other methods to collect from you and is now using direct legal authority to access your funds.
Why the State Sent This Notice
Pennsylvania law requires specific statutory notice before a bank levy can occur. The state sends a bank levy notice after a tax debt has gone unpaid and after other collection attempts have not worked.
This could include unfiled tax returns, unpaid income tax, unpaid sales tax, or other outstanding state tax obligations. Under Pennsylvania law, the Department must first provide notice of assessment and demand for payment, and then provide notice of intent to levy, with typically at least 10 days for response.
Pennsylvania statutes and regulations establish these notice procedures and collection sequences as mandatory requirements.
Understanding Protected Funds in Bank Accounts
Federal law provides specific exemptions for certain funds from levy. Social Security benefits are exempt from levy and garnishment under federal law.
Veterans Administration benefits are exempt under federal law. Supplemental Security Income is exempt under federal law.
Pennsylvania respects these federal exemptions when executing bank levies. Banks have established procedures to identify and protect exempt federal benefits deposited directly into accounts.
If your account contains protected federal benefits, please notify the Department immediately and provide documentation that shows the source of the funds. Banks must follow federal regulations for reviewing and protecting exempt funds during levy procedures.
What Happens If You Ignore This Notice
If you ignore a Notice of Bank Levy, the levy will proceed as written after the notice period expires. Your bank will either freeze or transfer the funds described in the notice to the state, as per the levy order.
The state will apply the collected money to your tax debt. If the levy does not collect enough to pay the full debt, the state may continue collection efforts through other enforcement methods authorized under Pennsylvania law.
The notice specifies a deadline for responding or taking action—missing that deadline means the levy will go forward unless you have requested deferral through a payment agreement or exercised your statutory appeal rights.
Your Statutory Rights and Options
Pennsylvania law provides specific statutory rights when you receive a bank levy notice
- You have the right to petition for reassessment if you believe the underlying tax
assessment is incorrect.
- You have the right to request a payment agreement, which may result in deferral of the
bank levy if you enter into and comply with an acceptable payment arrangement.
- You have the right to appeal determinations under established Pennsylvania
administrative procedures.
- You have the right to protect federally exempt funds by providing documentation of their
source and exempt status.
These are statutory rights established in Pennsylvania law, not discretionary options the
Department may or may not offer.
Bank Levies and Credit Reports
Bank levies are not reported to credit bureaus and are absent from consumer credit reports. Tax debts, including state tax debts, are not reported to consumer credit reports and do not affect credit scores.
Since April 2018, all three major credit bureaus have stopped reporting tax liens and tax debts as part of the National Consumer Assistance Plan. Tax debts remain public records if liens are filed separately, but bank levies themselves do not appear on credit reports or directly impact credit scores.
Steps to Take After Receiving This Notice
Follow these steps to respond and protect your statutory rights
1. Read the entire notice carefully and locate the deadline for responding, the amount of debt listed, the account information, and all contact information provided.
2. Verify that the bank account information on the notice matches your actual account, and contact your bank to confirm they have received the levy notice from Pennsylvania.
3. Gather your tax records, including tax returns for the period mentioned, payment records showing any payments made, and any prior notices the state sent before this levy notice.
4. Review the debt amount and compare it to your records, noting any discrepancies or payments you made since the original assessment.
5. Identify the specific response deadline in the notice and mark it on your calendar immediately, treating this deadline as mandatory.
6. Decide whether to petition for reassessment, request a payment agreement, claim federal exemptions for protected funds, or pay the full amount based on your circumstances and statutory rights.
7. Contact the Pennsylvania Department of Revenue using the contact information on the notice to discuss your statutory options, including payment agreements and petition procedures.
8. Submit any response in writing before the deadline, referencing your statutory rights when applicable, and send it by certified mail with a return receipt for proof of delivery.
9. Keep copies of all correspondence and document all phone conversations, including dates, names of representatives, and topics discussed.
10. Monitor your bank account after the deadline to track whether the levy was executed and note the exact date and amount if funds are transferred.
11. Follow up on any petition, payment agreement request, or exemption claim you submitted, and contact the Department in writing if you do not receive a response within
30 days.
12. Update your information with the Department if your address changes, your banking changes, or your financial situation changes significantly.
Payment Agreement Procedures
Pennsylvania law authorizes the Department to enter into payment agreements with taxpayers who are unable to pay their debt in full. Under Pennsylvania regulations, the Department may defer collection action, including bank levies, when a taxpayer enters into and complies with an acceptable payment agreement.
Payment agreement eligibility and terms are governed by published regulatory criteria based on your financial circumstances. To request a payment agreement, contact the Department before the levy deadline.
Provide complete financial information, propose realistic monthly payment amounts, and request written confirmation of any collection deferral during negotiation. Furthermore, obtain written confirmation of the approved agreement terms.
Common Mistakes to Avoid
Failing to respond by the deadline without exercising your statutory rights allows the levy to proceed without your input or protection of your interests. Not keeping detailed records of all payments, correspondence, and communications with the Department leaves you without proof if disputes arise later.
Failing to claim federal exemptions for protected funds when your account contains Social
Security, SSI, or VA benefits allows those funds to be levied when they should be protected. If you do not receive a response from the Department, please follow up in writing after 30 days, as silence should not be assumed as approval.
Closing
A Pennsylvania Notice of Bank Levy requires immediate attention and triggers important statutory rights under Pennsylvania law. You have legal options to address the debt through payment agreements, petitions for reassessment, appeals, and protection of federally exempt funds. Understanding these statutory rights, responding before the deadline passes, and working with the Department to resolve the underlying tax debt provides the most direct path forward.
Received a State Tax Notice?
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