What to Know About IRS Levy: How to Prevent and Release a Levy

Quick summary

An IRS levy lets the federal government seize assets to collect unpaid taxes. The IRS generally must send a “Final Notice of Intent to Levy and Notice of Your Right to a Hearing” at least 30 days before seizing assets; that 30-day window is your primary opportunity to stop collection or ask for a hearing (IRS Publication 594). This article explains how levies start, the most common types, clear steps to prevent or release a levy, forms and timelines, and practical tips from my experience helping taxpayers resolve levies.

How an IRS levy usually starts

1. Notice and Demand for Payment. The IRS first issues a notice stating you owe tax. If you ignore or don’t resolve the amount, the case moves toward enforced collection.
2. Final notice. Before levying property, the IRS must send a Final Notice of Intent to Levy and Notice of Your Right to a Hearing (often called a Final Notice). You generally have 30 days from that notice to request a Collection Due Process (CDP) hearing or otherwise address the debt (see IRS Publication 594, “The IRS Collection Process”).
3. Levy. If no arrangement is made, the IRS can levy wages, bank accounts, business assets, social security benefits in certain circumstances, and real property. The IRS does not need a court judgment to levy; it exercises administrative levy authority.

Source: IRS — ‘‘Levy’’ overview and Publication 594 (see https://www.irs.gov/businesses/small-businesses-self-employed/irs-levy and https://www.irs.gov/pub/irs-pdf/p594.pdf).

Common types of levies

• Bank levy (sweep of funds in an account). The bank usually must freeze the account and hold funds for 21 days while the taxpayer seeks release.
• Wage levy (garnishment). The IRS issues a wage levy to the employer; the employer must withhold until the levy is released.
• Administrative levy against state tax refunds or federal payments.
• Levy on real property or business assets, including levying accounts receivable or seizing inventory.

Note: Exemptions and protected amounts (for example, certain federal benefits) are governed by IRS rules and employer/bank procedures. See IRS guidance and speak with a tax professional for your case.

Immediate steps if you receive a levy notice (practical checklist)

1. Read every IRS notice carefully and note the deadline for a CDP hearing (usually 30 days). Missing this window restricts certain appeal rights.
2. Don’t ignore the notice. Call the IRS or your assigned revenue officer immediately to identify the balance, the reason for collection, and whether a hold or temporary release is possible.
3. File any missing tax returns right away. The IRS often won’t accept collection alternatives if returns are unfiled.
4. Gather documentation: recent pay stubs, bank statements, household budget, and proof of essential expenses. You’ll need these to request a release based on hardship or to negotiate a payment plan.

In my practice, early engagement with the IRS and good documentation are the two most important actions that stop or limit damage from a levy. I’ve seen clients avoid a bank sweep or shorten a freeze simply by producing bank and payroll records and proposing a realistic payment plan.

How to prevent a levy

• Respond to notices immediately. Use the contact information on IRS correspondence and keep a record of every call.
• Ask for a Collection Due Process (CDP) hearing if you receive a Final Notice. Filing Form 12153 requests a CDP and pauses most collection actions while the hearing is pending.
• Enter an installment agreement. For many taxpayers a monthly payment plan prevents levy once approved; you can apply online or via Form 9465 (or request a streamlined agreement if eligible).
• Consider an Offer in Compromise (OIC) if you cannot pay the full amount. An OIC can settle tax debt for less than the balance under specific eligibility rules; preparing a strong financial package is essential — see our guide “What Is an Offer in Compromise and How It Works” for details.
• Request Currently Not Collectible (CNC) status if you can’t pay due to financial hardship. This doesn’t erase the debt, but it can stop levies while your hardship persists.

Internal resources: see our article “What Is an Offer in Compromise and How It Works” (https://finhelp.io/glossary/what-is-an-offer-in-compromise-and-how-it-works/) and “When an Installment Agreement Is Better Than an Offer in Compromise” (https://finhelp.io/glossary/when-an-installment-agreement-is-better-than-an-offer-in-compromise/) for a comparison of options.

How to get a levy released

A levy release can happen quickly if you take one of the following actions:

• Pay the tax in full. Once the IRS receives payment, the levy is released. Processing the release can take a few business days but may be faster for electronic payments.
• Enter into a fully executed installment agreement. The IRS typically releases a levy once the agreement is approved and set up.
• Get an Offer in Compromise accepted. If the IRS accepts an OIC and you follow the payment terms, they will release the levy.
• Demonstrate economic hardship (unable to meet basic living expenses). Provide a completed financial statement (Form 433-F or Form 433-A/B) and request immediate release; revenue officers have authority to release levies when collection would create undue hardship.
• Bankruptcy. An automatic stay that accompanies a bankruptcy filing can stop IRS collection activity; consult a bankruptcy attorney because tax discharge rules are complex.
• Innocent spouse or separation of liability relief in some circumstances. Filing Form 8857 may affect collection if liability was assessed incorrectly.

If the IRS levies a bank account, contact the bank immediately. Banks typically have instructions about how to release funds to customers after an IRS levy is withdrawn; the bank can also provide details about the hold period.

Forms and tools to know (current and commonly used)

• Form 12153 — Request for a Collection Due Process or Equivalent Hearing (use to appeal a Final Notice).
• Form 433-F / 433-A / 433-B — Collection Information Statements to document income and expenses for CNC, installment agreements, or Offer in Compromise evaluations.
• Form 656 — Offer in Compromise application. (See our internal guides on preparing a complete OIC package.)
• Form 9465 — Installment Agreement Request (individuals) and the IRS Online Payment Agreement portal.

Always confirm current form numbers and filing instructions on IRS.gov before submission.

Timing: how long until a levy is released?

Timing varies. If you arrange payment electronically or the IRS approves an installment agreement, releases can occur in a few business days but sometimes take longer due to processing and communication to banks or employers. Bank policies may cause funds to remain frozen briefly even after a release notice. If you request a CDP hearing, collection action is generally suspended while the appeal is pending.

Common mistakes and red flags

• Ignoring notices. This is the single most frequent cause of unnecessary levies.
• Missing the CDP deadline. If you miss the 30-day window after a Final Notice, you lose the right to an immediate administrative appeal and must use other appeal channels.
• Providing incomplete financial documentation. If you want CNC status or an Offer in Compromise, incomplete or inconsistent paperwork will delay relief or cause denial.
• Paying an unauthorized third party. Use IRS.gov contact channels and avoid high-fee companies that promise guaranteed levy releases.

Real-world example (short)

A small business owner I worked with missed filing payroll returns during a busy quarter. The IRS issued a bank levy that froze operating funds and threatened payroll. By producing payroll records, filing the missing returns, and proposing a realistic short-term installment agreement, we persuaded the assigned revenue officer to release the bank levy within five business days — avoiding layoffs and stabilizing cash flow.

When to get professional help

If you’ve received a Final Notice, a levy has already started, or your situation involves business accounts or significant assets, consult a qualified tax professional (CPA, EA, or tax attorney). In my experience, early professional intervention improves outcomes because a practitioner can accurately prepare financial statements, negotiate with the revenue officer, and pursue the right appeals.

Practical next steps (fast plan)

1. Read the notice and calendar the CDP deadline.
2. File any missing returns immediately.
3. Gather pay stubs, bank statements and monthly budget.
4. Call the IRS and ask for the assigned revenue officer’s contact information.
5. If you can’t pay in full, apply for an installment agreement or CNC status — or prepare an Offer in Compromise if eligible.

Resources and links

• IRS: Levy overview and procedures — https://www.irs.gov/businesses/small-businesses-self-employed/irs-levy
• IRS Publication 594, The IRS Collection Process — https://www.irs.gov/pub/irs-pdf/p594.pdf
• FinHelp guides: What Is an Offer in Compromise and How It Works — https://finhelp.io/glossary/what-is-an-offer-in-compromise-and-how-it-works/
• FinHelp guide: When an Installment Agreement Is Better Than an Offer in Compromise — https://finhelp.io/glossary/when-an-installment-agreement-is-better-than-an-offer-in-compromise/

Professional disclaimer: This content is educational and general in nature. It is not tax advice for your specific situation. For advice tailored to your facts, contact a licensed tax professional (CPA, Enrolled Agent) or tax attorney.

Author credentials: I am a CPA and CFP® with over 15 years helping clients navigate IRS collection issues, including preventing bank levies and negotiating Offers in Compromise.