Bank Levy

An IRS bank levy is a powerful method used by the IRS to collect delinquent tax debts.   If you owe back taxes and have money in a bank, you are at risk of receiving a bank levy.  The IRS has the legal authority to seize funds by issuing a bank levy if:

IRS Bank Levy
  • Taxpayers have not paid their taxes, and/or
  • Taxpayers have not responded to IRS notices or phone calls.

Also, a bank levy can be quickly generated if you default on any payment plan entered into with the IRS.  Once the levy has been issued, it is very difficult to have it removed and may require help from a tax professional.

A bank levy can be attached to personal checking and savings accounts as well as business accounts.  When the bank receives the levy notice, they are required to freeze current funds up to the amount owed.   These funds must be held for 21 days before releasing them to the IRS.

A bank levy is a one-time levy.  You are free to use your account in a normal fashion after the bank freezes the amount required by the levy.  The bank is not allowed to hand over your money to the IRS right away.  The money is frozen for 21 days.  Once that holding period is concluded, the money is sent to the IRS and is irretrievable.  Future deposits can be reached only with additional levy action by the IRS.  However, if you do not resolve your outstanding tax debt with the first levy, the IRS may by their discretion levy your bank account again.

Releasing a Bank Levy

The 21-day holding period gives you the opportunity to convince the IRS to release the levy.

The IRS does not release bank levies under normal circumstances.  However, there are conditions that may qualify for release:

  • You paid the full amount of the tax debt
  • You filed an amended tax return showing you do not owe the tax
  • Your monthly expenses exceed your monthly income
  • The bank levy was issued due to an IRS processing error
  • The bank account is shared and the funds are not yours
  • You are behind on your mortgage, rent or medical bills, etc.
  • The bank levy inhibits the full collection of the balance due

All your required tax returns must be filed before a review of your special circumstances can be considered.

You Need Qualified Representation

Instant Tax Solutions can represent you in IRS negotiations, possibly getting your bank levy released.  We have been very successful in gaining favorable results during the 21-day holding period.

If you have received an IRS notice of intent to levy, Instant Tax Solutions may be able to prevent the levy from taking place and avoid future collection action.