Is a lien placed by firs on a taxpayers bank account a valid encumbrance against garnishee order
A lien placed by the IRS on a taxpayer's bank account is a valid encumbrance against a garnishee order, but it's not a straightforward answer. Here's a breakdown:
- IRS lien: When the IRS places a lien on a taxpayer's bank account, it's a public notice that the government has a claim against the taxpayer's assets. This lien is a valid encumbrance against the account, meaning that the IRS has a priority claim on the funds in the account.
- Garnishee order: A garnishee order is a court-ordered process where a third party (e.g., a bank) is required to turn over funds from a taxpayer's account to satisfy a debt or judgment. The garnishee order is typically issued by a court or a government agency.
- Priority of liens: In the event of a conflict between the IRS lien and a garnishee order, the IRS lien generally takes priority. This is because the IRS lien is a federal tax lien, which is a higher-priority lien than a state or local judgment or debt.
- IRS's right to offset: The IRS has the right to offset, or set off, the amount of the garnishee order against the amount of the taxpayer's debt to the IRS. This means that if the taxpayer owes the IRS a significant amount, the IRS can use the funds from the garnishee order to satisfy part or all of the taxpayer's debt.
- Bank's obligations: The bank, as the garnishee, is required to follow the court's order and turn over the funds to the creditor. However, the bank may also be required to notify the IRS of the garnishee order and hold the funds in a separate account until the IRS's lien is resolved.
In summary, a lien placed by the IRS on a taxpayer's bank account is a valid encumbrance against a garnishee order. The IRS lien takes priority over the garnishee order, and the IRS has the right to offset the amount of the garnishee order against the taxpayer's debt to the IRS. The bank, as the garnishee, is required to follow the court's order and notify the IRS of the garnishee order.