IRS Bank Levy Release: Act Before the 21-Day Hold Ends

What just happened to your account

An IRS bank levy is a one-time seizure of the money in your account. The IRS sends a notice of levy (Form 668-A) to your bank. The bank then freezes the funds in the account, up to the amount the IRS says you owe, and must hold them for 21 days before sending them to the IRS.

That 21-day hold exists so you have time to resolve the problem or show the levy is wrong. It's the single most important fact about a bank levy, and it's the reason to call today rather than next week.

A few other facts that people usually don't know:

• The levy only reaches the money in the account when the bank receives it. Deposits made afterward aren't caught by that levy. The IRS can issue a new one later, but a single bank levy is not ongoing the way a wage garnishment is.
• The bank may charge you a levy processing fee. That's a bank charge, not an IRS one.
• Joint accounts can be levied. If a co-owner of the account doesn't owe the tax, there are ways to claim their share back, but it has to be raised quickly and supported with records.
• Business accounts can be levied too. For a business, a frozen operating account can mean missed payroll, so it's an emergency for more than one person.

How a bank levy gets released

The IRS must release a levy in specific situations, and it can choose to release one in others. In practice, these are the routes we use most:

1. Setting up a payment plan. Once an installment agreement is approved, the IRS generally releases levies. If the balance is under the streamlined limits, a plan can often be set up without a full financial statement. See IRS payment plans.
2. Showing economic hardship. If losing the frozen money would leave you unable to pay basic, necessary living expenses, the IRS is required to release the levy. This requires a financial statement and documentation, and it often leads to currently not collectible status.
3. Proving the levy was a mistake. For example, the tax was already paid, the levy was issued during a bankruptcy, the statute of limitations on collection had expired, or the IRS didn't send the required notices first.
4. Paying the balance, either with the levied funds or other money, when that's the simplest and cheapest path.

What we do, step by step

First call. We find out what the levy notice says, which bank and account were hit, when the bank froze the funds, and what you owe by year. You sign Form 2848 so we can represent you.

Same day, where possible. We pull your IRS account transcripts. That shows us every balance, every missing return, and whether the IRS sent the required Final Notice of Intent to Levy before levying. If a procedural requirement was skipped, that matters.

Contacting the IRS. We call the IRS unit that issued the levy, usually the Automated Collection System, or a Revenue Officer if your case is assigned to one. We propose a specific resolution and request the release. If the IRS needs financial information, we prepare it with you right away.

Following through. If the IRS agrees, it sends a release (Form 668-D) to your bank. We confirm the bank received it and follow up until the funds are available again. Then we make sure the resolution is in writing, so you're not back here in three months.

We can't guarantee the IRS will release every levy. Some accounts have unfiled returns, prior defaulted agreements, or other problems that take longer to fix. What we can do is tell you honestly, on the first call, what's realistic in your situation.

Why the IRS levied you, and what it means for next time

Before a bank levy, the IRS is required to send a Final Notice of Intent to Levy and Notice of Your Right to a Hearing (usually Letter LT11 or Letter 1058), generally at least 30 days before levying. Many people never open it, or it went to an old address. Either way, a bank levy means your account has reached the enforcement stage, and more levies can follow until a resolution is in place.

That's why we don't stop at the release. A bank levy is usually a sign that something bigger is unresolved: a balance with no agreement, years that haven't been filed, or a payment plan that defaulted. We fix the underlying account so the IRS has no reason to levy again.

Bank levies and businesses

Business owners often find out about a levy when a payroll run bounces or a vendor payment fails. Business levies frequently trace back to unpaid payroll taxes, which the IRS treats more seriously than most balances because the money was withheld from employees. If your business account was levied, call right away. The IRS expects business owners to keep current deposits flowing, and we'll need to show that's happening to get a release.

State collections are separate. Most state revenue departments can also levy bank accounts for unpaid income, sales, or payroll tax, and their rules and holding periods differ from the IRS's. If both agencies are involved, we handle them together. See state tax debt.

Don't do this

• Don't empty or close your other accounts in a panic. Moving money to avoid a levy can make negotiations harder and, in some cases, create bigger problems. Talk to us first.
• Don't ignore the next notice. If you get more letters, open them and send them to us.
• Don't assume the bank can help. The bank is legally required to follow the levy. Only the IRS can release it.