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Can they seize bank account balances? Is there a limit?

Clarify your doubts by consulting your particular case

In most cases, due to its ease, the Executive Collection gives effect of hard-pressure debts through seizure of the taxpayer’s balances in accounts with credit institutions.

Despite the overall confusion on this issue, the seizure of bank accounts is absolutely legal, provided that the formal guarantees that are provided comply with the law. These guarantees can cite the need for prior authorization from the competent official (in the assumption that a preliminary investigation of the bank accounts had been necessary), its notification to the taxpayer, the indefeasible of certain parts of a wage, limitations in time deposits, as well as joint and several accounts etc.

The Supreme Court, in a recent judgment, declared void certain provisions of the General Collection Regulations, relating to the seizure of bank accounts, which exceeded the framework for action provided for in the General Tax Law. As a result of that judgment, the Government has approved a Royal Decree, rewording certain articles of the regulation. Moreover, the recent Law Reform Tax Code has made changes to guarantee legal certainty for taxpayers. As a result of the targeted nullity, the seizure of accounts in credit institutions has the following limits:

a) The preliminary investigation of accounts requires prior authorization from the Directorate General of Revenue or the Chief corresponding Treasury, without possibility of delegating to the Heads of Revenue.

b) The seizure order may be extended to the balances that may exist in a particular office, without, in any case, be extended to all balances in accounts with the entity to which the administration is directed.

c) In the event of several accounts existing on behalf of several individuals, without distinction or joint ownership, they may only seize quantities that actually correspond to the debtor and not the entire balance.

d) Time deposits may be seized immediately, but the custodian may not deliver the money seized until the following day of expiry of the stipulated day.

Once the seizure of assets is made, it must be notified to the taxpayer-debtor. The credit institution shall, within twenty calendar days, enter the amounts held in the open account on behalf of the Treasury.