Compliance Question of the Week

Do I have to take funds from a share certificate if I receive a levy?

Yes, a credit union can break the certificate to pay the levy, but according to the Credit Union National Association’s (CUNA) Compliance Department, it must hold the funds for 21 days after receiving the levy before releasing the funds to the Internal Revenue Service (IRS). Any excess funds minus the early withdrawal penalty and levy amount would be retained in the member’s savings account. According to CUNA, a levy attaches to all funds in the account at the time of the levy and up to the amount of the levy, and it attaches to all the member’s deposits including shares, joint accounts, and certificates of deposits/share certificates.

There is no regulatory exception given to the member if the funds are withdrawn due to a levy or if the member withdrew the funds himself. The credit union can make a business decision to waive the fee.

Related Links:

IRS Levy Information

 

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Around the NW, Compliance, CUNA, NWCUA.