Imagine checking your bank account — and finding that your funds are suddenly frozen. This isn’t a glitch; it’s an IRS bank levy, one of the agency’s strongest collection tools. When the IRS levies a bank account, your financial institution must hold your funds for 21 days before sending them to the IRS. During that window, you can still act — but time is critical.
This guide explains what happens when the IRS freezes your account, and how to get the levy released or avoid it altogether.
📘 Official Reference: IRS Levy — Seizure of Property
What Is an IRS Bank Levy?
A bank levy is when the IRS legally instructs your bank to freeze and seize funds in your account to pay your tax debt. The bank must comply by law — there’s no court order required.
Funds in your account up to the amount you owe are held for 21 days before being transferred to the IRS. After that time, unless you take action, the money is gone.
💡 Key Point: A levy is not the same as a lien.
- A lien is a claim on your property.
- A levy is an actual seizure of your money or assets.
Why the IRS Freezes Bank Accounts?
A bank levy usually means the IRS has tried multiple times to collect — and you haven’t responded.
Before the IRS levies your bank, it must:
- Assess the tax and send you a Notice and Demand for Payment
- Send a Final Notice of Intent to Levy (LT11 or Letter 1058) and a Notice of Your Right to a Hearing
- Wait 30 days after sending that notice before taking action
💡 In short: the IRS won’t freeze your account overnight — but ignoring letters for months can trigger a levy with no further warning.
📘 Timeline Reference: IRS Notice Process Before Levy
What Happens When the IRS Levies Your Bank Account?
Once the IRS issues a levy:
- Your bank freezes the balance in your account immediately (up to what you owe).
- The bank notifies you and the IRS of the freeze.
- You have 21 days to contact the IRS and resolve the issue.
- If nothing changes after 21 days, the funds are sent to the IRS.
During this time, the IRS can also issue levies on other accounts, wages, or property.
💡 Important: A levy only applies to funds already in your account when it’s issued — not future deposits. But the IRS can issue multiple levies if you don’t resolve the debt.
Step-by-Step: What to Do If the IRS Freezes Your Bank Account?
If your account is frozen, you still have time to stop the levy — but you must act immediately.
Step 1: Call the IRS Immediately
Contact the number listed on your levy notice. You’ll need to discuss your account and arrange a payment or resolution plan.
- Be ready to verify your identity.
- Explain your hardship or financial situation.
- Request a temporary hold while you submit documentation.
💡 Tip: If you’ve never received a Final Notice, mention that — improper notice may justify a full release.
Step 2: Request a Levy Release
You can request an immediate release if:
- The levy causes financial hardship
- The tax is paid or no longer owed
- The levy was issued in error
- You’ve entered a payment or settlement agreement
To prove hardship, you may need to complete Form 433-A (Collection Information Statement) showing your income, expenses, and assets. Once approved, the IRS contacts your bank to lift the freeze immediately.
📘 Reference: IRS Levy Release Procedures
📘 Form: IRS Form 433-A
Step 3: Enter an Installment Agreement
If you can’t pay in full, setting up a payment plan halts future levies. Once an agreement is active, the IRS must release the current levy and stop new ones.
📘 Apply Online: IRS Payment Plans & Installment Agreements
Step 4: Apply for Currently Not Collectible (CNC) Status
If paying anything would cause hardship (like eviction or inability to afford food), you can apply for CNC status. This stops all collection activity, including levies, until your situation improves.
📘 Official Program: Currently Not Collectible Status
Step 5: File an Offer in Compromise (OIC)
If your financial situation is long-term, an Offer in Compromise may settle your debt for less than the full amount owed. Submitting an OIC pauses all collection activity — including levies — while your application is reviewed.
📘 Reference: Offer in Compromise — IRS
How to Prevent Future Bank Levies?
Even if you stop one levy, the IRS can issue another unless you stay compliant. To avoid future freezes:
- File all required tax returns
- Make estimated or withholding payments on time
- Respond to all IRS notices immediately
- Keep current on any payment plan
📘 Compliance Resource: Understanding Your IRS Notices and Letters
How a Tax Attorney Can Help?
An experienced tax attorney can:
- Request an emergency levy release on your behalf
- File appeals, hardship claims, or Offers in Compromise
- Negotiate directly with the IRS to prevent new levies
- Protect joint accounts, business funds, or Social Security income
- Ensure IRS agents follow correct notice and due-process rules
Once Form 2848 (Power of Attorney) is filed, your attorney becomes your direct IRS representative — shielding you from stressful calls and deadlines.
📘 Reference: Form 2848 – Power of Attorney
Need help with a similar issue? Contact our firm today for a consultation.
When the IRS freezes your bank account, the clock starts ticking. You have 21 days to act before your funds are gone — but with the right steps, you can stop the levy, release your money, and prevent future freezes.
If your account is currently frozen or you’ve received a levy notice, contact Pelham PLLC immediately. Our tax attorneys can request emergency releases, negotiate with the IRS, and protect your finances from further enforcement.
FAQs
How long does an IRS bank levy last?
Your bank freezes funds for 21 days before sending them to the IRS. You can request a levy release within that time.
Can the IRS take all my money?
The IRS can seize up to the balance owed — but only what’s in your account at the time of the levy. Future deposits aren’t automatically taken unless another levy is issued.
What if I need that money for rent or bills?
You can request an immediate hardship release if the levy leaves you unable to meet basic living expenses.
Can the IRS levy a joint bank account?
Yes — even if only one account holder owes taxes.
Can the IRS levy multiple accounts?
Yes. The IRS can issue levies to any financial institution where you hold funds until your debt is resolved.
Will a bank levy show on my credit report?
No. Levies are not public records. However, the underlying lien may appear in public filings.
How can I stop future levies?
By setting up a payment plan, requesting CNC status, or settling through an Offer in Compromise. Acting quickly is key to avoiding repeat enforcement.
What’s the difference between a levy and a lien again?
A lien is a claim on property; a levy is an actual seizure. Levies happen when liens remain unresolved.
