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IRS Bank Levy

Complete Guide to Understanding and Releasing IRS Bank Levies

An IRS bank levy allows the IRS to seize funds directly from your bank account to pay tax debt. Unlike wage garnishment which takes money over time, a bank levy is a one-time seizure of everything in your account up to what you owe.

What is an IRS Bank Levy? A bank levy (Form 668-A) is an IRS collection action that freezes and seizes money in your bank account. The bank holds your funds for 21 days before sending them to the IRS, giving you a limited window to resolve the issue.

How an IRS Bank Levy Works

When the IRS issues a bank levy, they send Form 668-A (Notice of Levy) to your financial institution. Your bank is legally required to freeze the funds immediately and comply with the levy.

The bank levy process works as follows:

IRS issues levy: Form 668-A sent to your bank
Account frozen: Bank immediately freezes funds up to the levy amount
21-day hold: Funds held for 21 calendar days
Review for exemptions: Bank checks for protected federal benefits
Funds sent to IRS: After 21 days, non-exempt funds transferred to IRS

Important: A bank levy only affects funds in your account at the time the levy is received. Future deposits require a new levy.

The 21-Day Holding Period

The 21-day holding period is your critical window to take action. During this time:

Your funds are frozen but not yet sent to the IRS
You can negotiate with the IRS to release the levy
You can set up a payment plan or resolve the debt
You can prove economic hardship to get funds released

Act immediately. Once the 21 days pass, your bank will send the frozen funds to the IRS and recovery becomes much more difficult.

What Happens When Your Account is Levied

When an IRS bank levy hits your account, you will likely experience:

Frozen account access - You cannot withdraw levied funds
Bounced checks - Outstanding checks may be returned
Declined automatic payments - Bills, rent, and mortgage payments may fail
Overdraft fees - Banks may charge fees for failed transactions
Joint account impact - All funds in joint accounts can be seized

Contact your bank and billers immediately to prevent cascading financial damage from missed payments.

How to Release an IRS Bank Levy

There are several ways to get the IRS to release a bank levy. Act quickly during the 21-day holding period:

1. Pay the Debt in Full

The fastest way to release a levy. If you can pay the full amount owed (or borrow to pay it), the IRS will release the levy immediately.

2. Set Up an Installment Agreement

If you can afford monthly payments, the IRS will typically release the levy once you are approved for a payment plan. Call the number on your levy notice.

3. Prove Economic Hardship

If the levy prevents you from meeting basic living expenses (food, shelter, utilities, medical care), you can request release based on hardship. You will need to document your financial situation.

4. Request Currently Not Collectible Status

If your income and assets show you cannot pay anything, CNC status will release the levy and pause collection. Complete Form 433-F or 433-A.

5. Show the Levy Was Improper

If the IRS made an error (wrong person, already paid, improper procedure), you can request immediate release. Provide documentation proving the error.

6. Submit an Offer in Compromise

While an OIC will not immediately release a levy, requesting collection hold while preparing an OIC may pause action. This is a longer-term strategy.

Your Rights During a Bank Levy

As a taxpayer, you have important rights even when facing IRS collection:

Right to Notice: The IRS must send Final Notice at least 30 days before levying
Right to Appeal: You can request a Collection Due Process hearing
Right to Hardship Review: You can claim the levy causes financial hardship
Protected Benefits: Certain federal benefit payments have some protection
21-Day Window: Funds are held, not immediately seized, giving you time to act
Taxpayer Advocate: You can request help from the Taxpayer Advocate Service

Bank Levy vs. Wage Garnishment

Feature	Bank Levy	Wage Garnishment
Type	One-time seizure	Continuous withholding
Target	Current bank balance	Each paycheck
Holding Period	21 days	None (begins immediately)
Exempt Amount	Protected federal benefits only	Based on filing status/dependents
Future Deposits	Requires new levy	Automatically affected
Form Used	Form 668-A	Form 668-W

What NOT to Do

Do not wait out the 21 days - Act immediately to maximize your options
Do not transfer money to avoid the levy - This is illegal and can result in criminal charges
Do not close your bank account - The IRS will find your new account and levy it
Do not ignore future IRS notices - This will only lead to more levies
Do not take out loans without a plan - Borrowing only helps if you also resolve the underlying debt

How to Prevent Future Bank Levies

Respond to all IRS notices promptly - Do not let them escalate to Final Notice
Set up a payment plan before collection threats - Proactive arrangements prevent levies
File all required tax returns - Unfiled returns are a red flag to the IRS
Stay compliant with current taxes - New tax debt can trigger new collection action
Keep your address current with IRS - Ensure you receive all notices
Request a CDP hearing within 30 days - Timely appeals can prevent levy action

Resolution Options That Can Release a Bank Levy

Currently Not Collectible (CNC)

If you cannot afford basic living expenses, CNC status releases levies and pauses collection

Installment Agreement

Set up affordable monthly payments to release the levy and prevent future seizures

Offer in Compromise

Settle your entire tax debt for less than you owe if you qualify

Frequently Asked Questions

What is an IRS bank levy?

An IRS bank levy is a legal seizure of funds in your bank account to pay off tax debt. When the IRS issues a levy to your bank, the bank freezes the funds in your account up to the amount you owe. After a 21-day holding period, the bank sends those funds to the IRS unless the levy is released.

How does the 21-day holding period work?

When your bank receives a levy notice from the IRS, they must freeze the funds in your account for 21 calendar days before sending the money to the IRS. This waiting period gives you time to resolve the issue, dispute the levy, or work out a payment arrangement. The bank cannot release the funds to you during this period, but they also cannot send them to the IRS until the 21 days have passed.

Can the IRS take all the money in my bank account?

The IRS can levy up to the amount of your tax debt, plus penalties and interest. If your account balance is less than what you owe, they can take the entire balance. If your balance exceeds your debt, they will only take what is owed. Joint accounts can be fully levied even if only one account holder owes taxes.

Will the IRS levy my account again?

Yes, a bank levy is a one-time seizure of funds present in your account on the day the levy is issued. However, the IRS can issue multiple levies over time. If you deposit more money after a levy, the IRS would need to issue a new levy to seize those funds. This is different from a wage garnishment, which is continuous.

How do I get a bank levy released?

To release a bank levy, you can: (1) pay the tax debt in full, (2) set up an installment agreement, (3) prove the levy is causing economic hardship, (4) show the levy was issued in error, (5) get approved for Currently Not Collectible status, or (6) submit an Offer in Compromise that is accepted. Contact the IRS immediately during the 21-day holding period.

Can the IRS levy my account without warning?

No, the IRS must provide notice before levying your bank account. They are required to send a Final Notice of Intent to Levy (CP90 or LT11) at least 30 days before any levy action. However, many people miss these notices or have moved without updating their address with the IRS.

What happens to automatic payments when my account is levied?

When your bank account is levied and frozen, automatic payments, checks, and debit card transactions will likely be declined or bounce. This can result in overdraft fees, late payment penalties, and damage to your credit if bills go unpaid. Contact your billers immediately to make alternative arrangements.

Can the IRS levy my business bank account?

Yes, the IRS can levy business bank accounts for unpaid business taxes (payroll taxes, income taxes, etc.) or for personal tax debt if you are a sole proprietor. Business accounts of corporations and LLCs may be levied for the business entity tax debt.

Are any funds exempt from bank levy?

Certain federal benefit payments deposited in the last 2 months may be partially protected, including Social Security, SSI, Veterans benefits, and federal employee retirement. Banks are required to review accounts for protected benefits before honoring the levy. State exemptions may also apply.

How long does it take for the IRS to release a levy?

Once you have resolved the issue (payment plan, CNC status, etc.), the IRS should release the levy within a few days. The bank then typically releases frozen funds within 1-3 business days after receiving the release notice from the IRS. Acting quickly during the 21-day holding period is crucial.

Bank Account Levied?

Time is critical. Use our free tools to explore your options for releasing the levy and resolving your tax debt.

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Key Numbers

Holding Period21 days

Notice Required30 days before

IRS Phone800-829-1040

Collection Statute10 years

Related Resources

Wage Garnishment

How IRS takes money from your paycheck

Lien vs. Levy

Understand the difference

CP90 Notice

Final Notice of Intent to Levy

Immediate Action Steps

1Call IRS at 800-829-1040
2Request levy release or payment plan
3Document financial hardship
4Contact billers about missed payments
5Consider professional help