Overview

A bank levy lets a creditor — commonly the IRS or a private judgment creditor — take money directly from your bank account. The faster you act the better: certain IRS notices give you a 30‑day window to request a hearing that stops collection, and many relief paths depend on proving exempt income or arranging payment. (IRS.gov; ConsumerFinancialProtection Bureau)

Emergency checklist — first 24–72 hours

  • Confirm the levy: ask your bank for a copy of the levy notice and the exact amount frozen or seized. Banks will often provide the notice they received.
  • Preserve proof of exempt funds: if the account holds Social Security, SSI, VA benefits, unemployment, or other federal/state protected payments, gather account statements and benefit letters. The CFPB explains which benefits are often protected.
  • Contact the issuer: call the IRS or the creditor’s collection office shown on the notice. Note the representative’s name, badge number, and case ID.
  • Ask the bank if funds were released to the creditor or merely frozen. If frozen, you may have time to act before funds are surrendered.

Key timelines and what they mean

  • 30 days to request a Collection Due Process (CDP) hearing: if you received a Notice of Intent to Levy with a Right to a Hearing, you generally have 30 days to file IRS Form 12153 to appeal and halt collection while the appeal proceeds. Filing timely is often the fastest way to stop a scheduled levy. (IRS.gov)
  • If a levy already reached your bank: once a bank surrenders funds, reversing the seizure typically requires asking the creditor or IRS for a release and returning exempt funds — timelines vary depending on the agency and documentation you provide.

Forms and filings that matter

  • IRS Form 12153 (Request for Collection Due Process or Equivalent Hearing): use this to appeal a Notice of Intent to Levy and obtain an administrative stay on collection.
  • Form 433‑F or other Collection Information Statements: used to document income, expenses, and request installment agreements or Currently Not Collectible (CNC) status.
  • Written hardship request: for private creditors, a written claim asserting that funds are exempt under federal or state law and a request to release the levy.

How to prove funds are exempt

  • Show the bank and creditor proof that the funds are from protected sources: benefit award letters, direct‑deposit records, benefit ID numbers, or payroll stubs. The bank can sometimes release exempt amounts quickly once convinced the money is protected.
  • If the bank refuses, ask for a written explanation and escalate to the creditor or — for IRS levies — the IRS Collection division. The Consumer Financial Protection Bureau has guidance on recovering exempt funds.

Options to stop or release a levy

  • Timely CDP appeal (Form 12153): pauses IRS collection while the appeal is decided.
  • Negotiate a payment plan or installment agreement with the IRS/creditor: signed agreements often trigger an immediate levy release.
  • Request currently not collectible (CNC) status: if you can show hardship, the IRS may release the levy while debt remains pending.
  • Offer in Compromise (OIC): settle for less than full balance — this can lead to release but requires documentation.
  • Motion to quash or claim exemptions in state court (private creditor levies): for non‑tax levies based on a court judgment, filing in the issuing court can stop or limit seizure based on state exemption laws.

When to get professional help

  • If the levy involves large sums, business accounts, payroll funds, or benefits, consult a CPA, tax attorney, or an enrolled agent experienced in levy relief. In my practice, bringing a Collection Information Statement and a clear hardship narrative often accelerates a release.

Sample next steps (practical sequence)

  1. Request a copy of the levy from your bank and confirm whether funds were frozen or already sent.
  2. If you have a Notice of Intent to Levy, file Form 12153 within 30 days and follow up with the IRS by phone.
  3. Gather proof of exempt income and provide it to the bank and creditor immediately.
  4. Request an installment agreement or CNC if you cannot pay in full; submit Form 433‑F or the requested financial statement.
  5. If a private creditor levied your account, contact a state court clerk or debtor’s attorney about claiming exemptions or filing a motion to quash.

Common mistakes to avoid

  • Waiting to act: missing the 30‑day CDP deadline removes the administrative stop for IRS levies.
  • Assuming all benefits are unprotected: you must document exempt deposits to get funds returned.
  • Talking only to the bank: you must also engage the creditor or the IRS to secure a release.

Useful resources and internal links

Authoritative sources

Professional disclaimer

This article is for informational purposes and does not substitute for legal or tax advice. Consult a qualified tax professional, CPA, or tax attorney for guidance specific to your situation.