The 2012-2013 Pennsylvania state budget adopted last July authorized the use of administrative bank attachment by the Department of Revenue. Prior to utilizing this collection technique, the Department was required to develop guidelines regarding its new authority to order the attachment and seizure of funds. The Department has now issued an Informational Notice establishing those guidelines.

The Department may use administrative bank attachment for business entities, individuals operating as sole proprietors, shareholders, members or partners of pass-through entities, and corporate officers and other responsible individuals who have property subject to the Department’s lien in excess of $1,000.

The Department will not utilize administrative bank attachment for an assessment until a taxpayer’s appeal rights expire and the Department either cannot locate the taxpayer or the taxpayer refuses to satisfy the liability or establish a deferred payment plan.

Once the Department has filed a lien against a taxpayer, administrative bank attachment is only one of several enforcement methods available to the Department. For example, prior to seeking an administrative bank attachment, the Department may revoke a taxpayer’s sales tax license. Similarly, the Department is not required to use administrative bank attachment with respect to a particular case.

If the Department mails an attachment notice to the taxpayer’s financial institution, the Department must also send a notice to the taxpayer. The taxpayer (or the financial institution or an account holder of interest) has ten days from when the notice was sent to contest the attachment by filing a petition with the county court of common pleas where the taxpayer’s business is located or, if an individual, where the taxpayer resides. A copy of the appeal must be served via first class mail to the Department’s Office of Chief Counsel, Bankruptcy / Collections Unit. The law provides multiple grounds upon which relief may be granted, including for good cause, severe economic hardship and a request for spousal relief from joint liability. However, such grounds do not include a mistake or error in the Department’s original assessment that serves as a basis for the Department’s lien.

If no appeal is taken from the Department’s notice of attachment or upon the resolution of a challenge of the same, the financial institution must remit the seized funds, less its own administrative fee, if applicable, to the Department. Financial institutions are subject to various requirements under this law and a failure to attach accounts or remit seized funds as required may result in penalties.