Stopping a Bank Levy: Immediate Actions and Appeals

Quick overview

A bank levy gives the IRS the legal right to take money from your bank account to satisfy a tax debt. The levy can drain operating funds for individuals or businesses in 21 days if not stopped — but you have options to protect exempt income, buy time, and appeal. This article explains practical immediate actions, timelines, appeal routes (including Collection Due Process and the Taxpayer Advocate Service), and what to do next based on real-world experience helping clients handle levies.

How a bank levy works (short timeline)

• The IRS typically sends a Notice of Intent to Levy and Your Right to a Hearing (a “final notice”) before issuing a levy. You generally have 30 days from that notice to request a hearing (Collection Due Process). (IRS guidance: What to Do if the IRS Levies Your Bank Account)
• If a bank receives a levy, it must freeze the funds that were in the account on the day the levy was served and may hold them for up to 21 calendar days before sending them to the IRS.
• Certain types of federal benefits and other exempt amounts can be returned if you prove they are exempt.

(Authoritative guidance: IRS — “What to Do if the IRS Levies Your Bank Account”; IRS — “Collection Due Process and Equivalent Hearing”)

Step-by-step immediate actions to stop or limit a bank levy

Below are practical, prioritized steps to take the moment you learn a levy has been issued or your bank tells you a freeze is in place. In my 15+ years helping taxpayers, speed and precise documentation are the two factors that most often save accounts.

1. Confirm the levy is real and document everything

• Ask the bank for a copy of the levy notice (the bank receives the IRS levy notice and will note the date it was served).
• Verify by calling the IRS Collections number shown on IRS notices. Never give private information in response to an unsolicited call claiming to be the IRS; use contact information from IRS.gov or your notice.
• Keep a record: the bank’s notice date, the account balance on levy date, and the names of people you spoke with.

1. Ask the bank to identify exempt deposits and hold the funds

• Some deposits are exempt from levy (examples: Social Security, VA benefits, Supplemental Security Income, and certain federal retirement benefits). If those funds are present and you can document them, ask the bank to segregate or return them to you.
• Provide the bank any proof (benefit statements, deposit slip marking “SSA” or “VA,” or written bank statements showing those deposits).
• Note: banks follow levy instructions; they do not decide legal exemptions. But they can and often will return clearly identified federal benefit payments if properly documented.

1. Contact the IRS immediately and request a release or hold

• Call the IRS at the telephone number on the notice or the general collections line. Explain that the account contains exempt funds or that the levy will cause economic hardship.
• If the levy is an error (wrong taxpayer, wrong account, identity theft), ask for immediate release and provide supporting evidence.
• If you can pay the debt in full within the bank hold period (commonly 21 days), payment will stop the levy from being sent to the IRS.

1. Request a Collection Due Process (CDP) hearing or submit Form 12153

• If you received a Notice of Intent to Levy and you file a timely Form 12153 (Request for a Collection Due Process or Equivalent Hearing), the IRS must generally release the levy during the appeal if you filed within the allowed time and raised collection alternatives.
• The CDP route is time-sensitive: you typically have 30 days from the date of the notice to request a hearing. Use certified mail or an IRS-designated online method and keep proof of filing. (See IRS links on CDP rights.)

1. Contact the Taxpayer Advocate Service (Form 911)

• If the levy will cause immediate financial hardship (for example, you cannot pay for shelter, utilities, medical care, or transportation to work), contact the Taxpayer Advocate Service and submit Form 911. In practice, TAS can often obtain a temporary release while it researches your case.
• The TAS is an independent organization within the IRS that helps taxpayers in hardship situations (taxpayeradvocate.irs.gov).

1. Consider alternatives while you appeal

• Request currently not collectible (CNC) status if your income and expenses demonstrate you cannot pay. CNC does not remove the lien but can halt collection temporarily.
• Offer in Compromise (Form 656) or an installment agreement can be negotiated; sometimes negotiating a quick partial payment will prompt the IRS to release a levy if they see good-faith effort.
• If appropriate, bankruptcy can create an automatic stay that halts most IRS collections — consult a bankruptcy attorney; this is not the right move for everyone.

What to include in a release request or hearing packet

When asking for a levy release or a CDP hearing, present clear evidence. Typical items that strengthen a case:

• Bank statements showing the account balance on levy date and subsequent deposits marked with their source.
• Proof that deposits are exempt federal benefits (SSA statements, VA award letters, electronic payment confirmation).
• A completed financial statement (IRS Form 433-A or 433-F) to show inability to pay or to support an installment agreement.
• Medical bills, eviction notices, or other documentation demonstrating economic hardship.

Common scenarios and how they resolve (practical outcomes)

• Partial payment + installment agreement: In many cases I’ve handled, a quick partial payment and a signed installment agreement prompted immediate levy release.
• Exempt federal benefits identified: Banks will often return clearly identified Social Security or VA deposits if you provide proof quickly; that prevents an immediate cash shortage.
• Erroneous levy (wrong SSN/account): A documented, demonstrable error usually results in a quick administrative release once the IRS confirms the mistake.

What the IRS cannot (generally) levy

• Certain federal benefit payments are exempt (Social Security, VA, SSI), but you must document them. State law and specific circumstances can change how banks treat mixed deposits; get documentary proof and act fast. (See IRS guidance on exempt income.)

When to involve a tax professional or attorney

• If you’re near the 30-day CDP deadline and unsure how to proceed, get a tax attorney, enrolled agent, or CPA involved immediately. In my practice, a focused professional submission (Form 12153 + financials) often avoids an otherwise irreversible transfer of funds.
• If identity theft or bank error is suspected, an attorney can escalate and coordinate with the bank and IRS more efficiently.

What to expect after a levy is released

• If the IRS releases a levy, the bank returns the frozen funds. The IRS often releases levies when a payment plan is in place, when funds are exempt, or when a CDP hearing is granted and collection alternatives are being considered.
• A release does not erase the underlying tax lien — it only stops or reverses the immediate seizure of bank funds.

How to reduce future levy risk

• File and pay timely; if you cannot pay in full, set up an installment agreement or submit an Offer in Compromise when eligible.
• Keep accurate records of federal benefit deposits and mark deposit slips when possible to avoid confusion.
• Respond promptly to IRS notices. Delays are the most common reason levies escalate.

Useful resources and internal links

• For emergency steps to release a levy quickly, see our guide: Emergency Options to Release a Bank Levy Quickly (https://finhelp.io/glossary/emergency-options-to-release-a-bank-levy-quickly/).
• For a plain-English explanation of what a bank levy is and the rules that apply, see: What is an IRS Bank Levy? (https://finhelp.io/glossary/what-is-an-irs-bank-levy/).
• For immediate steps taxpayers commonly take, see: Options for Taxpayers Facing a Bank Levy: Immediate Steps (https://finhelp.io/glossary/options-for-taxpayers-facing-a-bank-levy-immediate-steps/).

Authoritative federal sources cited in this article:

• IRS — What to Do if the IRS Levies Your Bank Account: https://www.irs.gov/individuals/what-to-do-if-the-irs-levies-your-bank-account
• IRS — Collection Due Process (CDP) rights and Form 12153 information: https://www.irs.gov/appeals/collection-due-process
• Taxpayer Advocate Service (TAS): https://taxpayeradvocate.irs.gov/

Disclaimer: This article provides general information about U.S. federal tax collection and is not legal advice. Tax situations differ; consult a licensed tax professional, CPA, or tax attorney for personalized guidance.

(Information verified against IRS guidance as of 2025.)