When the IRS issues a levy, your paycheck, bank funds, or even personal property can be taken to satisfy tax debt. But that doesn’t mean you’re out of options. You can negotiate a levy release — often within days — if you act quickly and know the right procedures. The IRS is legally required to lift a levy if it was issued in error, creates hardship, or you’ve entered an approved payment or settlement plan.
📘 Official References:
What Is an IRS Levy Release?
An IRS levy release is a formal action that removes the IRS’s hold on your wages, bank account, or property. It restores your access to funds and prevents further seizures.
💡 Key Point: The IRS can’t keep your property indefinitely — it must release the levy when legal conditions are met or when you show financial hardship.
When the IRS Must Release a Levy?
Under 26 U.S.C. § 6343, the IRS is required to release a levy if any of the following apply:
| Condition | Explanation |
|---|---|
| 1. Liability is satisfied or unenforceable | The tax debt has been paid in full, or the statute of limitations on collection has expired. |
| 2. Release facilitates collection | Releasing the levy will help the IRS collect the tax more effectively (e.g., allowing sale of assets to pay the debt). |
| 3. Installment agreement entered | The taxpayer has entered a valid installment agreement under § 6159, and the agreement does not require continuation of the levy. |
| 4. Economic hardship | The levy is creating an economic hardship by preventing the taxpayer from meeting reasonable living expenses. |
| 5. Property value exceeds liability | The fair market value of the levied property exceeds the amount owed, and releasing part of it won’t jeopardize collection of the rest. |
📘 Reference: 26 U.S.C. § 6343(a)
Step-by-Step: How to Negotiate a Release of an IRS Levy
Follow these steps to stop a levy and restore your funds or income as fast as possible:
Step 1: Contact the IRS Immediately
Call the IRS number listed on your levy notice (typically from Letter 1058 or LT11). Explain that you’re seeking an immediate release due to hardship or intent to pay.
💡 Pro Tip: If you’re represented, your tax attorney can contact the IRS’s Automated Collection System (ACS) or Revenue Officer directly to expedite release.
Step 2: Prove Financial Hardship (If Applicable)
If the levy prevents you from paying for food, rent, or medical care, you can qualify for an economic hardship release.
💡 Result: If the IRS agrees you cannot pay basic living expenses, they’ll mark your account “CNC” and release the levy immediately.
Step 3: Enter a Payment Agreement
If you can pay over time, request an Installment Agreement. Once approved, the IRS must release the levy and stop any new enforcement.
Step 4: Submit an Offer in Compromise (If Eligible)
If your financial situation prevents full repayment, you can negotiate a settlement through an Offer in Compromise (OIC). While the IRS reviews your OIC, all levies are paused.
💡 Tip: A successful OIC both removes the levy and permanently settles your debt for less than owed.
Step 5: File for Appeal or Hearing
If you disagree with the levy or never received proper notice, you can request a Collection Due Process (CDP) hearing using Form 12153. During your appeal, all collection activity — including levies — must stop.
💡 Even if you missed the 30-day deadline, you can still request an Equivalent Hearing for negotiation purposes.
📘 Form: IRS Form 12153
📘 Program Info: Appeal a Collection Action
How to Verify the Levy Was Released?
Once your levy release is approved, the IRS sends Form 668-D to your bank or employer. You’ll receive a copy confirming that the levy has been lifted.
💡 Always confirm with your employer or bank that the release was received and processed.
What If the IRS Refuses to Release the Levy?
If the IRS denies your request, you can:
- File a Taxpayer Advocate Service (TAS) complaint for emergency relief
- Request a Collection Appeals Program (CAP) review
- Reapply with updated financial documents
💡 The TAS can often force the IRS to act faster in cases of financial hardship or procedural errors.
📘 Resource: Taxpayer Advocate Service – Get Help
How a Tax Attorney Can Help?
A qualified tax attorney can:
- Contact the IRS and negotiate an emergency levy release within hours
- Prove hardship with accurate financial documentation
- Set up installment or OIC agreements to prevent new levies
- File appeals and represent you before the IRS Collections Division
Once Form 2848 (Power of Attorney) is filed, your attorney becomes your direct representative with the IRS.
📘 Reference: IRS Form 2848 – Power of Attorney
Need help with a similar issue? Contact our firm today for a consultation.
An IRS levy is serious — but not final. By understanding your rights and acting fast, you can negotiate a release, stop enforcement, and regain control of your finances. Whether through hardship relief, a payment plan, or a negotiated settlement, there’s always a legal way to lift a levy.
If your wages or bank account are at risk, contact Pelham PLLC today.
FAQs
Will the IRS notify my employer or bank of the release?
Yes. The IRS sends Form 668-D directly to them and to you. Always confirm with your bank or HR department.
Does filing bankruptcy stop an IRS levy?
Yes, temporarily. Bankruptcy triggers an automatic stay that halts all IRS collection activity — but it doesn’t always eliminate the debt.
Can the IRS levy again after releasing it?
Yes, if you default on your new agreement or fail to stay current on taxes. The release applies only to the current levy action.
What’s the difference between a levy release and a lien withdrawal?
A levy release removes the seizure; a lien withdrawal removes the public notice of IRS claim.
Do I need professional help to negotiate a levy release?
Not always — but if your case involves wage garnishment, business levies, or appeals, an attorney can make the process faster and safer.
