What Is a Bank Levy?
A bank levy is an IRS enforcement action that freezes and seizes funds in your bank account. Unlike a lien (which is a claim), a levy is actual seizure of your property.
- Funds frozen immediately upon bank receiving levy notice
- 21-day holding period before funds sent to IRS
- Can seize joint accounts where you're an owner
- Affects all accounts at that financial institution
How to Release a Bank Levy
Several options exist to get your funds released during the 21-day holding period.
- Pay the tax debt in full
- Set up an installment agreement
- Demonstrate financial hardship (can't meet basic living expenses)
- Show the levy was issued in error
- Request a Collection Due Process hearing
- Have your tax professional negotiate with IRS
The 21-Day Window
Your bank must hold levied funds for 21 days before forwarding them to the IRS. This is your window to negotiate a release. Act immediately—contact a tax professional or the IRS as soon as you discover the levy.
Preventing Future Levies
Once you address the current levy, take steps to prevent future seizures. Options include entering an installment agreement, submitting an Offer in Compromise, or qualifying for Currently Not Collectible status.
Frequently Asked Questions
The IRS can levy up to the amount you owe in taxes, penalties, and interest. They can only take what's in your account at the time of the levy, but the 21-day hold prevents you from accessing those funds.
A single levy notice applies only to funds in the account at that time. However, the IRS can issue additional levies. The best protection is resolving the underlying tax debt through payment, installment agreement, or other resolution.
Yes, this is the critical window to negotiate. Contact the IRS or a tax professional immediately. If you can demonstrate hardship or establish a payment arrangement, the IRS may release all or part of the levy.
Similar but different. A bank levy is a one-time freeze and seizure of account funds. Wage garnishment is ongoing seizure of a portion of each paycheck until the debt is paid.
Yes. If you're an owner on a joint account, the IRS can levy the entire account. The non-debtor spouse may be able to claim their portion through the wrongful levy process.