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My bank account has been levied. What can I do?

Foreign Contractor – Bank Account Levied for Failure to Pay Taxes.?

  • Hello, I am not a US citizen. Neither do I reside in the States. One of my clients is an US-based company. For services I deliver, the company makes direct payments to my bank account in the States. I have been involved with the projects for this client on the assumption that I am not subject to the US taxation. Today, I checked my bank statement and found that a large chunk of money is gone. I contacted my bank and was informed that the money went to the IRS. I skyped to the IRS office and the officer confirmed the measure saying I owe the IRS taxes. He said they had mailed me notifications a few months ago and I failed to respond to them. This is true: I did not respond – because they mailed the notices to my old address in the States where I once resided 10 or 12 years ago while on H-1 visa working for an American IT company. Back then, I paid taxes – that’s why my address is in the system. In other words, I could not possibly receive notices from the IRS and I did not expect them. I explained to the IRS officer that for the last 7 years I have in fact been a foreign contractor and described the specifics of my work for the client. The officer attached a note to my IRS record suggesting I should file with the IRS some tax forms, if I want to resolve the case, and do the filing promptly – within 21 days. The officer also mentioned something to the effect that the amount taken from my account is based on their calculation of my US income, as reflected in 1099 form submitted – either correctly or mistakenly – to the IRS by my client. My impression was that the IRS wants to treat my earnings as US income, regardless of my explanations, and I may not get my money back, or only a part. Anyway, the bottom line, though, is that they cannot just adjust my record and wire my money back to my bank account. Does this exchange with the IRS officer make sense to you? And if it does, what are the steps I should take to get my money back as soon as possible? It’s a rather urgent issue – I am abroad and my resources are low now. Thank you.

  • Answer:

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It seems to me that the IRS is treating you like a citizen and this is the first issue that you must resolve or dispute with strong evidence. The fact that you were also depositing your money in a US bank account doesn't help. I would suggest reading through the following IRS guide as your first step: http://www.irs.gov/pub/irs-pdf/p515.pdf I'm interested in following your case, please report back anything that you find. Have your considered a legal consultation?

Lisa J

Yes, it makes sense: 1. You have income from the U.S. 2. The client correctly reported paying you the money. 3. You did not file a tax return. 4. The IRS must treat the income in the 1099 form as U.S. income unless they receive written documentation (not just a telephone call) stating otherwise. 5. The IRS cannot correct anything based simply on a telephone call. None of the money can be returned until they receive written documents. The steps that you should take are to send the forms that the IRS officer told you to send, to file tax returns for all of the years that did work for the client in the U.S.

StephenWeinstein

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