In recognition of the continuing economic hardship caused by the COVID-19 pandemic, the Internal Revenue Service is easing its collection activities to avoid the seizure of bank accounts containing either Economic Impact Payments or Paycheck Protection Program loan proceeds.
In a guidance memorandum issued to all collection employees, the IRS has directed that before issuing a levy, employees should contact the taxpayer in question to determine if it received a PPP loan, and if so, where the funds were deposited. Employees are further directed that they should not levy on a bank account that contains PPP funds received within the prior 24 weeks. If PPP funds are inadvertently levied, the IRS must release the levy unless there are exigent circumstances, such as the expiration of a statute of limitations or an indication that the taxpayer intends to dissipate assets.
In a separate guidance memorandum, collection employees are directed to contact taxpayers in advance of a levy to determine if the taxpayer received an Economic Impact Payment, and if so, where the funds were deposited. Collection personal are directed that they must not levy on a bank account known to contain such funds received with the prior 8 weeks. If Economic Impact Payment funds are levied inadvertently, the IRS must release the levy unless exigent circumstances exist.