Quick overview
If the IRS levies your bank account, the clock starts immediately: the bank typically freezes the funds and then has a limited time to turn them over to the IRS. Acting quickly — within the statutory notice and appeal windows — gives you the best chance to protect exempt funds and to negotiate a workable resolution such as an installment agreement, an Offer in Compromise, or a Currently Not Collectible (CNC) status.
This article explains the levy process, the most effective options to regain access or stop future levies, practical steps to take right away, and where to find official IRS guidance and forms.
How an IRS bank levy works (brief timeline)
- Notice and demand: Before a levy, the IRS must send a notice and demand for payment (a tax bill).
- Final Notice of Intent to Levy: If you don’t pay or arrange payment, the IRS sends a final notice — commonly an LT11 or CP504 — that explains your right to a Collection Due Process (CDP) hearing and gives you at least 30 days to act (IRS — Collection Due Process) [https://www.irs.gov/appeals/collection-due-process-cdp-rights].
- Levy: If you don’t resolve the debt or file timely for appeal, the IRS can serve a levy on your bank. The bank will generally freeze the levied funds (the hold period is commonly 21 days) and may ultimately remit the funds to the IRS.
Sources: IRS levy and collection pages (IRS, 2025) [https://www.irs.gov/businesses/small-businesses-self-employed/levy].
Immediate steps to take if your bank account is levied
- Read every IRS notice. Look for the Final Notice of Intent to Levy (LT11) or CP notices and the date of levy.
- Contact the IRS immediately. Use the phone number on the notice — don’t rely on general IRS hotlines, which can be slower. Ask for the levy case owner or the Automated Collection System representative.
- Call your bank. Ask whether funds were frozen or already remitted. Banks typically must hold levied funds for a short period (commonly 21 days) before sending them to the IRS.
- File an appeal (Form 12153). If you believe the levy is incorrect or you want a hearing, file Form 12153 (Request for a Collection Due Process or Equivalent Hearing) to preserve appeal rights.
- Gather financial records. If you plan to request hardship, an installment agreement, or Offer in Compromise, prepare recent pay stubs, bank statements, and a completed collection information form (Form 433-F or Form 433-A depending on the situation).
Key forms: Form 12153 (CDP), Form 9465 (Installment Agreement Request), Form 656 (Offer in Compromise), Form 433-F/433-A (Collection Information Statement) (see IRS form pages) [https://www.irs.gov/forms-pubs].
Practical resolution options (and when they make sense)
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Collection Due Process (CDP) hearing (Form 12153): Use this to appeal a levy, request release, or propose an alternative collection method. Filing a CDP request within 30 days usually halts collection until the hearing decision.
Source: IRS CDP page [https://www.irs.gov/appeals/collection-due-process-cdp-rights]. -
Installment agreement: If you can pay but need more time, an installment agreement (IA) spreads payments monthly. If the IA is accepted and the IRS is satisfied, levies are typically released.
Forms: Form 9465 for basic agreements and online application through IRS Online Payment Agreement tools. -
Offer in Compromise (Form 656): If you can’t pay the full amount and meet strict criteria, an Offer in Compromise (OIC) may let you settle for less than the full tax debt. OICs require full financial disclosure and are reviewed thoroughly.
Source: IRS Offer in Compromise [https://www.irs.gov/businesses/small-businesses-self-employed/offer-in-compromise]. -
Currently Not Collectible (CNC): If paying would create financial hardship, you can ask the IRS to place your account in CNC status. This suspends active collection (including levies) temporarily, though penalties and interest continue to accrue.
Note: CNC is not forgiveness; it’s a temporary suspension based on inability to pay. Document your monthly income/expenses carefully (Form 433-F/433-A). -
Levy release for exempt funds or hardship: Some funds are exempt from levy (e.g., certain federal benefit payments may be protected under law). You can request immediate release of a levy, especially to protect household necessities. The IRS reviews exemption claims and may release levied funds if valid.
Source: IRS levy rules [https://www.irs.gov/businesses/small-businesses-self-employed/levy].
How banks handle levies (what to expect)
- The bank receives the levy and identifies accounts in the taxpayer’s name. Banks often freeze the funds and may notify account holders.
- The bank must follow federal rules about exempt deposits and notices, but it has no authority to decide tax liability.
- If the bank remits funds to the IRS, reversing a remittance can be more complex than preventing it. Immediate communication with both the bank and the IRS is critical.
For practical guidance on handling an already-executed levy, see our internal guide: How to Release a Federal Tax Levy on Your Bank Account (FinHelp) [https://finhelp.io/glossary/how-to-release-a-federal-tax-levy-on-your-bank-account/].
Common mistakes that make levies worse
- Waiting to respond to LT11/CP notices: Missing the 30-day CDP window limits appeal rights and can speed levy action.
- Assuming a levy won’t affect essential bills: Banks may freeze funds needed for rent, utilities, or payroll; act quickly.
- Giving incomplete financial information: If you request CNC, an IA, or OIC, incomplete or inaccurate forms delay resolution and reduce credibility.
Sample scripts (what to say on the first calls)
- To the IRS agent: “I received notice number [notice ID]. I want to discuss options to stop the levy. Can you tell me the levy case number and the balance due? I’d like to request a Collection Due Process hearing or set up an installment agreement.”
- To the bank: “My account has a levied hold. Has the bank remitted funds to the IRS? If not, how long will you hold the funds? I’m contacting the IRS about stopping or resolving the levy.”
When to get professional help
In my 15+ years as a CPA working on tax controversies, I’ve seen the difference a timely, well-documented response makes. Complex cases — such as levies on business operating accounts, levies involving joint accounts or trust funds, or when federal benefits are affected — usually benefit from a tax attorney, enrolled agent, or CPA who can communicate effectively with the IRS and prepare the required financial statements.
For hands-on steps you can take to pay taxes after a levy, see our related article: Options for Paying Taxes After a Bank Levy Has Been Placed (FinHelp) [https://finhelp.io/glossary/options-for-paying-taxes-after-a-bank-levy-has-been-placed/].
FAQs (brief)
- Can the IRS take my entire bank account? The IRS can seize available funds in your account up to the balance of the tax debt, but some deposits may be protected. Request a levy release quickly if those funds include exempt benefits.
- Will a levy harm my credit score? Levies do not directly appear on your credit report, but tax liens (filed as public records) and related collection actions can affect credit.
- How long before funds are sent to the IRS? Banks usually hold funds for a short statutory period (commonly 21 days) before remitting. Acting immediately is essential.
Resources and official links
- IRS — Levy (general): https://www.irs.gov/businesses/small-businesses-self-employed/levy
- IRS — Collection Due Process (CDP) rights: https://www.irs.gov/appeals/collection-due-process-cdp-rights
- IRS — Offer in Compromise: https://www.irs.gov/businesses/small-businesses-self-employed/offer-in-compromise
- Form 12153 (Request for CDP): https://www.irs.gov/forms-pubs/about-form-12153
- Form 9465 (Installment Agreement Request): https://www.irs.gov/forms-pubs/about-form-9465
- CFPB — Bank levies and consumer guidance: https://www.consumerfinance.gov/
Professional disclaimer
This article is educational and does not substitute for individualized tax advice. Tax law and IRS procedures change; consult a qualified tax professional (CPA, enrolled agent, or tax attorney) for advice tailored to your situation.
Author: CPA with 15+ years in tax and financial planning. Content reviewed against current IRS guidance (2025).