Getting an IRS Levy Released | Kathryn Meyer Law PC

Call the IRS at the number on the levy notice right away and ask for a release on one of the grounds the law recognizes. Section 6343 of the Internal Revenue Code requires the IRS to release a levy if, among other things, you pay the debt, you enter an installment agreement that does not allow the levy to continue, or the levy is causing an economic hardship. For a bank levy, the bank must hold the frozen money for 21 days before sending it to the IRS, and that is your window to act.

A release stops the seizure, but the tax is still owed, so the request works best when it comes with a plan for the balance. Kathryn Meyer's page on IRS collections and enforcement covers levies alongside the other collection tools.

How is a bank levy different from a wage levy?

	Bank levy	Wage levy
What it reaches	Funds in the account when the levy is received; money deposited later is normally not affected	Part of every paycheck, continuing until the debt is paid, other arrangements are made, or the levy is released
Timing	The bank holds the funds for 21 days before paying the IRS (IRC 6332(c))	Continuous from the date it is first made until it is released (IRC 6331(e))
Hardship rule	The levy may be released	The levy must be released

The IRS says the 21-day wait is meant to give you time to contact it, arrange payment, or point out errors in the levy.

How much of your pay is protected?

The IRS sends your employer Publication 1494 with the levy. Your employer gives you a Statement of Dependents and Filing Status to return within three days; if you do not return it, the exempt amount is figured as if you were married filing separately with no dependents. Some 2026 monthly figures from Publication 1494:

Filing status	No dependents	1 dependent	2 dependents
Single	$1,341.67	$1,783.34	$2,225.01
Married filing jointly	$2,683.33	$3,125.00	$3,566.67

Everything above the exempt amount goes to the IRS. The IRS notes that a bonus paid separately can be taken in full, because the exemption is tied to the pay period, and that if you have other income it may assign the exemption there and levy all of a particular paycheck. If a court ordered you to pay child support before the levy arrived, the IRS will release the amount needed for it. Section 6334 also exempts certain income entirely, including unemployment benefits, workers' compensation, certain public assistance and service-connected disability payments.

On what grounds must the IRS release a levy?

Under section 6343(a) and the IRS's own summary, the IRS must release a levy if:

you paid the amount owed;
the collection period ended before the levy was issued;
releasing the levy will help you pay the tax;
you enter an installment agreement whose terms do not allow the levy to continue;
the levy creates an economic hardship, meaning it prevents you from meeting basic, reasonable living expenses; or
the property is worth more than the debt and releasing part of it will not hinder collection.

Hardship is the ground that fits when a levy has emptied an account or cut a paycheck below what you need to live on. The IRS will usually ask for financial information to decide, and it suggests having the fax number of the bank or employer handling the levy ready so the release can move quickly. If the IRS agrees that you cannot pay at all, section 6343(e) requires it to release a wage levy as soon as practicable; that status is explained in what currently not collectible status means.

What should you do in the first days?

Find the levy notice (Form 668-A for banks, Form 668-W for wages) and call the number on it, or the number on your most recent IRS letter.
Explain your situation and gather proof of income, rent or mortgage, utilities, medical costs and other basic expenses.
Propose a way to resolve the balance, such as one of the IRS payment plan options; an agreement is itself a ground for release.
If the money is not yours, for example an elderly parent's account on which you are only a signer, the owner should call and be ready to show ownership.
If the IRS refuses, ask about an appeal under the Collection Appeals Program. Publication 1660 says you may appeal before or after a levy, and you can also appeal a denial of a request to return levied property.

Did you get your chance at a hearing?

Before most levies, section 6330 requires a final notice of intent to levy at least 30 days in advance, which carries the right to a Collection Due Process hearing. If that window has passed, an equivalent hearing may still be requested within one year of the levy notice, although it does not stop the levy. Some levies, such as a levy on a state tax refund, can come first, with the hearing offered afterward.

What if the levy was a mistake?

Section 6343(b) lets the IRS return wrongfully levied property, and money levied or received from a sale may be returned within 2 years of the levy. If an IRS error caused a bank levy, you can ask to be reimbursed for the bank's charges on Form 8546, provided the IRS caused the error, you did not contribute to it, and you had responded on time to earlier IRS contacts. A release, whatever the reason, does not erase the debt; the IRS can levy again if the balance is not addressed.

What changes the answer

Bank or wages. If a wage levy causes an immediate economic hardship it must be released; for a bank or other account, the IRS says it may be released.
When the levy arrived. A bank levy freezes the funds in the account at the date and time the bank receives it; later deposits are normally not affected.
What else is pending. Section 6331(k) bars a levy while an offer in compromise or an installment agreement request is pending, and section 6015(e) generally bars one on a spouse who has a timely innocent spouse request pending; see innocent spouse relief.
Bankruptcy. Publication 908 says the automatic stay generally bars levies to collect taxes that arose before the bankruptcy filing; see whether income taxes can be discharged in bankruptcy.
The collection deadline. A levy issued after the 10-year period has ended must be released; see how long the IRS has to collect a tax debt.
Whose money it is. Funds that belong to someone else, such as a parent whose account you only sign on, can be released when the owner shows ownership.

For example: a bank levy two weeks before rent is due

For example, imagine a self-employed designer who ignored several IRS letters and finds that her bank has frozen $6,200 under a levy delivered on the 3rd of the month. Her rent and utilities are due on the 1st. Inside the 21-day hold, she calls the number on Form 668-A, explains that the frozen money is what she needs for basic living expenses, and has her lease, bills and income records ready, along with the bank's fax number. She proposes a payment plan for the balance. If the IRS agrees that the levy causes an economic hardship, or sets up an installment agreement whose terms do not allow the levy to continue, it can release the levy before the bank sends the money. The debt itself remains, and missing the plan payments could bring a new levy. This is a hypothetical, not a real case.

Common mistakes after a levy

Waiting out the 21 days. After the hold, the bank sends the money to the IRS.
Calling without numbers. The IRS usually needs financial information to decide hardship.
Moving money around after the levy. Talk to counsel first; the levy reaches funds in the account when it arrived.
Not returning the Statement of Dependents. Without it, the exempt amount is figured at the lowest level.
Treating a release as the end. The balance is still owed, and the IRS can levy again.

What to do this week

Find the levy notice and the date it reached the bank or employer.
Call the number on the notice the same day and ask for a release on the ground that fits.
Gather proof of income and basic expenses, and the fax number of the bank or employer.
For a wage levy, return the Statement of Dependents and Filing Status to your employer within three days.
Propose a payment plan or ask about hardship status for the balance.
If the IRS refuses, ask about a Collection Appeals Program appeal.

Frequently asked questions

Does a bank levy take money deposited after it arrives?

Normally not. The IRS says funds are frozen as of the date and time the levy is received, and later deposits are normally not affected.

Can the IRS take your whole paycheck?

Not normally. Part of each paycheck is exempt based on your filing status and dependents, though a bonus paid separately can be taken in full.

Is a levy on your bank a contact the IRS has to tell you about?

A levy served on a bank or employer is treated as a third-party contact; see whether the IRS can contact your bank, clients or employer.

Can an offer in compromise stop a levy?

Yes, while it is pending and for 30 days after a rejection, under section 6331(k); see whether you qualify for an IRS offer in compromise.

Can you recover bank fees from a wrongful levy?

Yes, on Form 8546, if the IRS caused the error, you did not contribute to it, and you had responded on time to earlier IRS contacts.

Is a levy the same as a lien?

No. A lien is a claim on your property; a levy takes it. See whether a federal tax lien can be released or withdrawn.

Getting a levy released quickly

A release request is stronger when it arrives with financial documents and a realistic proposal for the balance. Kathryn Meyer spent more than two decades in the IRS Office of Chief Counsel and helps clients facing bank levies and wage garnishments. If a levy has hit your account or paycheck, contact the firm or call (571) 560-8674.

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