You try to pay a bill and your card is declined. You check your account and the balance is frozen, or gone. If the IRS has levied your bank account, the next three weeks matter. Here's how an IRS bank levy works, why the 21-day window is important, and what you can do during it.
What is an IRS levy?
The IRS describes a levy as "a legal seizure of your property to satisfy a tax debt." It's different from a lien: a lien is a legal claim against property that secures the debt, while a levy actually takes the property. (IRS: What is a levy?)
A levy can reach many kinds of property, including wages, bank accounts, retirement accounts, rental income, accounts receivable and commissions.
The IRS has to warn you first
According to the IRS, it will usually levy only after these requirements are met:
- The IRS assessed the tax and sent you a Notice and Demand for Payment (a tax bill).
- You neglected or refused to pay.
- The IRS sent you a Final Notice of Intent to Levy and Notice of Your Right to a Hearing at least 30 days before the levy.
- The IRS sent you advance notice that it may contact third parties.
In practice, the notices people see before a levy include the CP504 (Notice of Intent to Levy) and the LT11 or Letter 1058 (final notice of intent to levy and your right to a hearing). (IRS: Understanding your CP504 notice; IRS: Understanding your LT11 notice or Letter 1058)
If you moved or missed your mail, you may not have seen these notices. That's common, and it's one reason to request your IRS account transcripts as soon as possible.
Why the 21 days matter
The IRS explains: "If the IRS levies your bank, funds in the account are held and after 21 days sent to the IRS." (IRS: Levy)
That holding period is your window to act before the money leaves your bank. Once the funds are sent, getting them back is harder, though not always impossible.
A bank levy is generally a one-time seizure of what's in the account when the bank receives it. Wage levies are different: the IRS describes them as continuous. (IRS: Levy) Money you deposit after the levy date is generally not covered by that levy, but another levy can follow if the debt isn't resolved.
What to do, day by day
Days 1–3: get the facts
- Find the notice. Your bank should tell you about the levy. Look for the IRS notice and any CP504, LT11 or Letter 1058 you received earlier.
- Confirm the balance and tax years. Use your IRS Online Account or call the number on the notice.
- Don't ignore it or move money around in a panic. Moving money to avoid collection can create bigger problems. Get advice first.
- Gather your financial information. The IRS will usually need financial information to consider a release or a payment plan: income, monthly expenses, other accounts and assets.
Days 3–10: request a release if you qualify
The IRS says you should "contact the IRS immediately to resolve your tax liability and request a levy release." The IRS is required to release a levy if it determines that:
- You paid the amount you owe
- The period for collection ended before the levy was issued
- Releasing the levy will help you pay your taxes
- You enter into an installment agreement and its terms don't allow the levy to continue
- The levy creates an economic hardship, meaning it prevents you from meeting basic, reasonable living expenses
- The value of the property is more than the amount owed, and releasing the levy won't hinder collection
(IRS: How do I get a levy released?)
On hardship: the IRS says that if a levy on your wages is creating an immediate economic hardship, the levy must be released. If a levy on your bank account is creating a hardship, it may be released. Have the bank's fax number ready when you call, to help the IRS act quickly. (IRS: What if a levy is causing a hardship?)
Days 5–15: set up a resolution
A release doesn't erase the debt. As the IRS puts it, "the release of a levy does not mean you don't have to pay the balance due," and a levy can be reissued if you don't make arrangements.
Options to discuss include:
- A payment plan (installment agreement). The IRS's LT11 page notes that if you owe less than $50,000, you may be able to set one up with the Online Payment Agreement tool. (IRS: LT11; IRS: Payment plans)
- An Offer in Compromise, if you can't pay in full or doing so would cause financial hardship. (IRS: Offer in compromise)
- Filing any missing returns. The IRS often requires filing compliance before approving most payment options.
Throughout: know your appeal rights
- Collection Due Process (CDP): available after a Final Notice of Intent to Levy. Publication 1660 explains that calling the IRS does not extend the 30-day period to make a written request for a CDP hearing. The request is made with Form 12153. (Publication 1660; Form 12153)
- Collection Appeals Program (CAP): the IRS says you may appeal before or after a levy, and you can also appeal a denial of a levy release. (IRS: How do I get a levy released?)
The deadlines depend on which notice you received and when, so read the dates printed on your notice.
After day 21: is it too late?
Not necessarily. The IRS says that after levy proceeds have been sent, "you may file a claim to have them returned to you," and you can appeal a denial of that request. You still need to address the underlying balance to prevent the next levy.
Common mistakes to avoid
- Waiting to see whether the levy "goes away." It won't, and the 21-day clock keeps running.
- Calling without your financial information ready, which can delay a hardship decision.
- Getting a release without a plan, which leads to another levy later.
- Forgetting state taxes. If you also owe California's FTB, it has its own bank levy (an "order to withhold") and its own rules.
How Tax Resolution Plus can help
Tax Resolution Plus works with individuals and businesses on IRS levies from our Irvine, California office and by phone nationwide. With your signed power of attorney (IRS Form 2848):
- We pull your IRS transcripts.
- We talk to the IRS for you.
- We help you request a release where the rules allow.
- We put a payment plan, offer or other resolution in place.
We can't promise the outcome of any IRS decision, but we'll explain your realistic options quickly.
Got a bank levy? Call (866) 900-9001 or book a free consultation today.
This article is general information, not tax or legal advice. IRS procedures change; check the linked IRS pages and the dates on your notice.