The Internal Revenue Service, or IRS, has the power to investigate your finances if it believes you are withholding assets. One investigative tool the IRS uses is a bank summons. This is a legal document requiring your bank to turn over your bank statements, account balance and other pertinent information to the IRS. You have the right to object to the bank summons -- if you don't, the IRS has full power to examine your bank records.
The IRS must send a notice to your bank no later than 23 days before it intends to look at your bank records. Your bank must then send you a notice within 3 days of receiving the summons. This gives you adequate time to prepare a complaint. You may formally object to the summons by responding in writing to the notice; the IRS must then schedule a hearing and prove that it has adequate reason to summon your bank account information. You have 20 days to object after receiving a summons notice.
Bank Turns Over Information
The bank may turn over information to the IRS before you object. The IRS may not look at the information until the 20-day objection period is over. If you don't file an objection, the IRS then examines your bank statements or other information your bank turned over to the IRS. If it concludes that you didn't report income appropriately after looking at these statements, it will adjust your return accordingly and send you a notice.
Appearance Before IRS
You are not usually required to appear before the IRS if it summons your bank. However, if you receive a summons from the IRS addressed personally to you, you must appear before the IRS and either turn over required documents or provide a justification for not turning over the documents as requested. You can be punished with $1,000 fine and up to a year in jail if you ignore such a summons.
A bank levy is different from a bank summons. A summons requires the bank to turn over information; a levy requires it to put a freeze on your account and turn over funds. If the IRS puts a levy on your bank account, your bank will notify you after your funds have been frozen. The IRS can't put a continuous levy on your account -- once it takes funds out of your account, it can't touch future funds without a new levy order.
Jack Ori has been a writer since 2009. He has worked with clients in the legal, financial and nonprofit industries, as well as contributed self-help articles to various publications.