How levy releases fit into the IRS collection process
An IRS levy is one of the most serious collection tools: after multiple notices and demands for payment, the IRS can legally seize property to satisfy a tax debt (bank accounts, wages, accounts receivable for businesses, etc.). A levy release undoes that seizure and restores the taxpayer’s access to the property. The IRS explains levies and releases in its collection guidance; see IRS Publication 594: The IRS Collection Process for official details (IRS, Publication 594: https://www.irs.gov/publications/p594).
In practice, a levy release does not erase the underlying tax debt — it simply ends the immediate seizure so you can pay day‑to‑day bills and continue working and living. Depending on the reason for the release you may still owe taxes and must keep working with the IRS to resolve the debt.
Common reasons the IRS will release a levy
The IRS may agree to release a levy in several typical situations:
- Financial (economic) hardship: The levy prevents the taxpayer from meeting basic living expenses (food, shelter, utilities, necessary medical care). The IRS will consider whether releasing the levy is necessary to avoid undue hardship. (See “Options for collection”—IRS collection guidance.)
- Procedural or identity errors: If the levy was placed in error — for example, the IRS assessed tax against the wrong taxpayer — the levy should be released once corrected.
- Payment arrangements: If you enter an approved installment agreement, the IRS often releases a levy as part of the agreement terms. The IRS also releases levies after acceptance of an Offer in Compromise or other negotiated resolution.
- Bankruptcy, death, or terminated collection: A levy must be released if the debt is discharged in bankruptcy or if the taxpayer dies and the liability is no longer collectable.
Authoritative sources: IRS Publication 594 and the IRS page on bank levies and wage levies provide details on when levies should be removed (https://www.irs.gov/businesses/small-businesses-self-employed/levy and https://www.irs.gov/taxtopics/tc203).
Step‑by‑step: How to request a levy release
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Read the notices and identify the contact. The IRS sends notices before and after a levy — read the Notice of Intent to Levy or the levy notice itself and call the phone number on the notice. If you have a revenue officer or an IRS Collection Specialist assigned to your case, contact them directly.
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Act fast for bank and wage levies. Bank levies and wage garnishments move quickly. If cash was frozen in your bank account, contact the bank immediately and identify any funds that are exempt (examples below). For wage levies, provide payroll or living‑expense information to your employer and the IRS as soon as possible.
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Gather documentation. The IRS assesses release requests based on evidence. Typical documents include:
- Bank statements showing exempt deposits (Social Security, veterans’ benefits, child support, etc.)
- A current budget or proof of monthly living expenses (rent/mortgage, utilities, food, medical) — Form 433‑F or Form 433‑A (Collection Information Statements) can be used to summarize finances
- Proof of an accepted payment arrangement, Offer in Compromise, or bankruptcy papers
- Documentation correcting identity or assessment errors (SSN corrections, amended returns)
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Request the release from the right person or office. Call the number on the levy notice or the Collections phone number. If a revenue officer served the levy, call that officer or their manager. For bank levies, you can also ask the bank what steps it needs to release exempt funds while you pursue relief with the IRS.
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Put the request in writing when appropriate. For sustained relief or appeals, submit written documentation and your request for release. If you disagree with the levy, file a Collection Due Process (CDP) appeal using Form 12153 within the statutory deadline (typically 30 days from the Notice of Intent to Levy). The appeals process can stay collection activities while the dispute is resolved (IRS, Appeals & CDP guidance: https://www.irs.gov/appeals).
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Use available collection alternatives. If a release is not automatic, propose a realistic resolution: an installment agreement, Offer in Compromise (Form 656), or request Currently Not Collectible (CNC) status. The IRS may agree to release the levy once you establish a formal plan.
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Follow up and keep records. Ask for written confirmation of any levy release and retain copies of all correspondence, forms and proof you submitted. If the IRS delays or refuses, consider escalating to the Collection Manager or filing a formal appeal.
Emergency options and timing to expect
- Bank levies: If you can prove exempt funds are in the account (Social Security, veterans’ benefits, etc.), banks may return exempt amounts quickly — sometimes within days — but timelines vary. See the IRS bank levy page for what counts as exempt (https://www.irs.gov/businesses/small-businesses-self-employed/bank-levies).
- Standard processing: Many release requests are resolved within 30 days if the IRS has all required documents and the request fits a standard release reason (financial hardship, installment agreement, error correction).
- Appeals: Filing a CDP appeal can halt further collection while the appeal is pending, but strict filing deadlines apply. File Form 12153 to start the appeal process (https://www.irs.gov/forms-pubs/about-form-12153).
In my practice, timely communication — ideally within the first business day of learning about a levy — materially improves outcomes. Documentation that ties your monthly cash flow to necessary living costs is often decisive when requesting a hardship release.
What counts as exempt funds
Certain types of income are protected from levy in whole or in part. Common exempt sources include:
- Social Security and Railroad Retirement benefits (often fully or partially exempt)
- Supplemental Security Income (SSI)
- Veterans’ benefits
- Child support and other public assistance in some states
- Certain unemployment benefits
Confirm exemption rules on the IRS site and provide bank statements that clearly identify the source of deposits; the IRS and banks often require this to return funds quickly.
Documentation checklist (quick reference)
- Copy of the levy notice (keep the original)
- Detailed monthly budget and proof of essential expenses
- Bank statements showing exempt deposits (with annotations)
- Pay stubs and employer contact information (for wage levies)
- Copies of any proposed or approved payment plan (installment agreement, Offer in Compromise)
- Bankruptcy or court documents (if applicable)
Mistakes to avoid
- Waiting to act. Bank levies and wage garnishments escalate fast.
- Failing to document exempt funds. Without clear proof, banks and the IRS will not return money.
- Assuming a release erases the tax debt. A release restores access to assets but does not necessarily cancel the underlying balance owed.
Related resources on FinHelp.io
- How to Request a Levy Release for Financial Hardship — practical forms and sample letters: https://finhelp.io/glossary/how-to-request-a-levy-release-for-financial-hardship/
- Emergency Options to Release a Bank Levy Quickly — short‑term steps to protect cash flow: https://finhelp.io/glossary/emergency-options-to-release-a-bank-levy-quickly/
- How to Stop an IRS Levy in 10 Practical Steps — proactive actions when you first get a Notice of Intent to Levy: https://finhelp.io/glossary/how-to-stop-an-irs-levy-in-10-practical-steps/
(These internal guides include sample language and checklists you can adapt when contacting the IRS or your bank.)
Sample letter language (brief)
I am writing to request the release of the levy issued on [date] against my [bank account/wages]. I am requesting release due to financial hardship and have attached my current budget, bank statements showing exempt deposits, and a completed Form 433‑F (Collection Information Statement). Please contact me at [phone/email] to confirm receipt and next steps.
Sincerely,
[Your name]
When to get professional help
If the levy involves complex issues (business accounts, payroll tax levies, identity theft, or large sums), work with a qualified tax professional — an enrolled agent, CPA, or tax attorney. In my experience as a tax practitioner, levies on business accounts and payroll taxes require fast, specialized handling to avoid harm to employees and operations.
Final notes and disclaimer
A levy release can restore critical access to funds and reduce immediate hardship, but it rarely resolves the underlying tax liability on its own. Use the steps above to prepare a strong request, gather the right documents, and communicate promptly with the IRS and your bank.
This article is educational and does not replace personalized legal or tax advice. For help with a specific case, consult a qualified tax professional or contact the IRS directly: https://www.irs.gov/ (IRS collection guidance and forms referenced above).
