Can The IRS Levy My Child's Bank Account?
When you owe money to the IRS, a bank account levy is one of those most common tools that the government uses to collect its money.
When the IRS sends a Notice of Levy to your bank, they are required to turn over all of the money that they are holding that you have a legal right to.
This includes all of the money in any accounts that your name is on. In practice, what your bank will do when they receive a Notice of Levy is that they will look up every account that has your Social Security Number on it, and that's what they are going to take.
When you set up your son or daughter's bank account, you were most likely required to put your name and social security number on the account. So your kid's account is going to come up in the bank's search.
Because you have signature authority on your child's account, legally you have a right to that money.
And because you have a right to that money, the IRS can take it through a bank account levy.
In some situations you may be able to call the IRS and prove to them that the money was not yours and you may get them to give the money back to your child -- if you get a nice agent on the phone.
In most cases, though, the position of the IRS is simply going to be that you had a legal right to that money, so it's fair game.
The simplest way to deal with a bank account levy is to prevent it from happening in the first place. You accomplish this by proactively attacking your tax problem rather than waiting for the IRS to make the first move.
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