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
- 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.
- 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”).
- 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)
- Read every IRS notice carefully and note the deadline for a CDP hearing (usually 30 days). Missing this window restricts certain appeal rights.
- 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.
- File any missing tax returns right away. The IRS often won’t accept collection alternatives if returns are unfiled.
- 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)
- Read the notice and calendar the CDP deadline.
- File any missing returns immediately.
- Gather pay stubs, bank statements and monthly budget.
- Call the IRS and ask for the assigned revenue officer’s contact information.
- 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.
