IRS Form 8546: A Detailed Guide for 2023

Bank account levies are a standard debt collection method the IRS utilizes to settle tax liabilities.

Still, they must follow proper procedures when seizing funds from a bank account. A levy is erroneous if the taxpayer and the bank don’t receive notices before the IRS takes the due amount from an account.

Hence, you can file IRS Form 8546 if a bank charged you a levy processing fee even though you took steps to enter an installment agreement or resolve your tax liability in some other way.

By completing this form, you can also get a refund for costs you accrued due to a check the IRS misplaced or DDIA processing mistakes.

In either case, you must meet the filing criteria and have substantial proof that the IRS is responsible for the mistake before filing the form.

In our detailed guide, you’ll find everything you need to know about IRS Form 8546 and how to use it to request reimbursement of bank charges in 2023.

Key Points

• Taxpayers have twelve months to file IRS Form 8546 after accruing an expense.
• The maximum refund amount a taxpayer can request on IRS Form 8546 is limited to $1,000.
• The IRS might decline to reimburse bank fees if they don’t acknowledge an erroneous levy.

What is IRS Form 8546?

Erroneous levies aren’t common, but from time to time, the IRS makes a mistake and takes funds from an account of a taxpayer who already made other arrangements to settle their tax debt.

IRS Form 8546 enables you to reclaim the fee a bank charges for processing a levy and sending the funds from a levied bank account to the IRS. The levy processing fee depends on the bank, but in most cases, the bank will take approximately $100 for its processing services.

Banks also charge fees for canceling lost or misplaced checks, usually around $35, and you can request the reimbursement of the funds you used to stop payment on a lost check with Form 8546.

Taxpayers who were charged an overdraft fee because of a Direct Debit Installment Agreement processing (DDIA) error can use this form to request a refund.

However, you cannot use this form to reclaim the funds or property the IRS has already levied. If the IRS erroneously seized your property, you must make an administrative wrongful levy claim and present your case before the Collection Appeals Program.

A Quick Guide to Erroneous Levies

The IRS must follow specific procedures during the collection process, so before they levy your bank account, they must send you a series of notices, including Notice CP14, Notice CP501, or Notice CP504.

You should also receive Notice LT11, and if you don’t respond to this notice within thirty days, the IRS will send Form 688-A(C)DO Notice of Levy on Wages, Salary, and Other Income to your bank.

The bank can’t take funds from your account for three weeks after getting this document from the IRS because doing so would make the levy erroneous.

A premature levy is one of many examples of an erroneous levy, so let’s take a quick look at other situations when a levy can be incorrect.

• A taxpayer didn’t receive proper correspondence from the IRS before issuing the levy.
• The IRS levied a bank account even though an installment agreement or offer in compromise request was approved or under consideration.
• A levy was issued after the collections statute of limitations expired.
• The taxpayer’s case was before the tax court or in the CDP hearing process when their bank account was levied.
• The taxpayer paid the entire balance due before the IRS levied their bank account.

Meeting the Filing Criteria

The IRS reimburses bank charges to taxpayers only under certain conditions, so you must ensure you meet all criteria before filing Form 8546.

You can request a refund of a fee your bank charged for processing a levy under the following circumstances:

• You responded to the notices the IRS sent you and disclosed information regarding the tax liability that caused a bank account levy.
• You didn’t contribute to the compounding or prolonging of the error.
• The IRS accepts that the levy was erroneous.

The conditions for requesting the reimbursement of the costs of canceling lost checks are slightly different, and you can file Form 8546 if:

• The IRS acknowledges your check was lost during processing.
• You received a request for a payment replacement from the IRS.
• The IRS received a valid check as a replacement for the previous check you sent.

In case of a DDIA processing error, you can use the form to request a refund if:

• The bank fees result from the IRS’s incorrect actions or systemic failure.
• You didn’t contribute to the compounding or prolonging of the error.
• You didn’t refuse to provide the information necessary to make the DDIA processing adjustment before the processing error occurred.

It’s also worth adding that bank charges include the regular levy processing fees, charges for canceling a check, and overdraft charges. The IRS will disallow the refund if a bank waives fees for canceling a lost check.

How to Fill Our IRS Form 8546?

Requesting the reimbursement of bank charges on IRS Form 8546 involves more than just completing the form; you must include additional documents to support your claim.

Hiring a tax relief company to fill out and file the form for you is an avenue you should explore if you don’t feel confident going through this process alone.

Besides the form, your refund request should contain the following documents:

• A copy of the levy notice if you request the reimbursement of bank charges caused by an erroneous levy.
• A bank statement that lists the fees a bank charged to your account due to a request for a replacement payment, a DDIA processing error, or a levy issued by mistake.
• The proof that you paid the bank charges.

Once you have all the necessary documents, you can complete Form 8546. Remember that you must fill out each block on this form and write NONE if one of the blocks doesn’t apply to your situation.

To complete the form’s first section, enter the claimant’s name, address, telephone number, and EIN or SSN. Entering your SSN or EIN on this form isn’t mandatory, but doing so will speed up the processing of your request.

You should also indicate the amount you’re claiming and the best time to call in this section of the form.

The IRS will send a check for the reimbursement amount if you want to avoid receiving a refund via an electronic funds transfer. In this case, you should write NONE in boxes six through ten and proceed to describe the claim in box 11.

However, if you want to receive a refund via EFT, you must disclose the following information:

• Names associated with a bank account
• American Bankers Association number
• The bank’s address and name
• The account type (savings or checking) and the bank account number.

Describe how you accrued the bank charges you’re claiming in box 11, then sign Form 8546 and enter the date of the claim, commonly the same day you file the form.

Signing and dating the form means you accept that the amount you claim covers only the bank charges resulting from an erroneous bank account levy, a DDIA processing mistake, or stopping payment on a check the IRS misplaced.

Due Dates, Mailing Address and Penalties

The maximum amount you can claim on Form 8546 is $1,000, and you’ll have a year after the bank charges you a fee to file the form.

The IRS might charge a civil penalty for presenting a fraudulent claim if the claimant enters incorrect information on this form. The fine is $2,000 plus double the damages the United States sustains due to a fraudulent claim.

Moreover, the penalty for presenting a fraudulent claim or making false statements is $10,000, up to five years of imprisonment, or both.

You cannot e-file the claim for reimbursement of bank charges. Instead, you must send it along with all other documents to the IRS office that sent you the notice of levy or the office where you filed the installment agreement request.

The IRS will reimburse the funds to the bank account you entered on Form 8546 or send a check to your home address if your claim is approved.

Frequently Asked Questions

Here are some of the questions that are commonly asked related to the filing of IRS Form 8546.

Requesting Reimbursement of Bank Charges with IRS Form 8546

The IRS occasionally makes processing errors that result in bank charges you must pay even though you’re not responsible for the mistake.

Filing IRS Form 8546 enables you to amend that mistake and claim the refund of the fees you had to cover due to a DDIA processing error, erroneous levy, or a lost check.

Although the process of filing the claim for reimbursement of bank charges seems straightforward, it’s still advisable to speak with a tax professional who is familiar with your case before sending Form 8546 to the IRS.