If you owe back taxes and do not pay or make other arrangements, the IRS can levy your bank account, wages, or other property to collect the debt. An IRS bank levy can freeze funds in your account, while an IRS wage levy (often called wage garnishment) can reduce each paycheck. If this happens, contact the IRS promptly to request a levy release and discuss your tax resolution options.
What Is an IRS Levy?
A levy is the legal seizure of your property to pay a tax debt. A levy is different from a federal tax lien. A tax lien is the government’s legal claim against your property; it is not a taking of your property. A levy, on the other hand, actually takes the property.
Under Section 6331 of the Internal Revenue Code (“I.R.C.”), the IRS can levy almost anything you own or are owed, such as: bank and investment accounts, wages, commissions, payments due from customers, Social Security benefits, retirement accounts, vehicles, and real estate. The IRS does not need a court order for most levies.
An IRS levy does not come out of the blue. The IRS will first send you a bill showing the tax, interest, and penalties it has assessed. If the bill is not paid, the IRS sends a series of follow-up notices before it levies. The last of these is the Final Notice of Intent to Levy and Notice of Your Right to a Hearing (usually Letter LT11 or Letter 1058).
That letter (LT11 or Letter 1058) tells you that you have 30 days from the date of the letter to request a Collection Due Process (CDP) hearing with the IRS Independent Office of Appeals. You make this request on Form 12153, Request for a Collection Due Process or Equivalent Hearing. A timely request for a CDP hearing generally stops levy action while the hearing, and any appeal to the U.S. Tax Court, is pending.
If you miss the 30-day deadline, the IRS may begin levying. You can still request an “equivalent hearing” within one year from the date of the notice, but that request does not automatically stop collection, and the decision cannot be appealed to the Tax Court.
How Do IRS Bank Levies and Wage Levies Work?
Bank Accounts
A bank levy is a one-time collection event. When the IRS levies your bank account, it can only take what is in the account at the time the bank receives the levy (up to the amount owed to the IRS). Any deposits that are made afterward are not subject to the levy (though the IRS can send another levy to the bank). By law, the bank must hold the funds for 21 days before sending them to the IRS (I.R.C. § 6332(c)). That 21-day window gives you an opportunity to get the levy released.
Wages and Commissions
A wage levy is continuous. Your employer must keep sending the IRS everything above an exempt amount from each paycheck until the tax debt is paid or the IRS releases the levy (I.R.C. § 6331(e)). The IRS does not take your entire paycheck, but it can take most of it. The exempt amount depends on your filing status and number of dependents and comes from tables in IRS Publication 1494 (I.R.C. § 6334(a)(9), (d)). Be sure to complete and return the Statement of Exemptions that comes with the levy; if you do not, your employer must figure the exempt amount as if you were married filing separately with no dependents.
Social Security and Other Federal Payments
Through its automated Federal Payment Levy Program, the IRS can generally take up to 15% of each Social Security payment (I.R.C. § 6331(h)). Other federal payments, such as federal salaries and retirement benefits, can also be levied through this program. Supplemental Security Income (SSI) cannot be levied.
Retirement Accounts
The IRS can levy an IRA or, in many cases, a 401(k). However, the IRS’s own manual tells its employees not to levy retirement accounts unless the taxpayer has engaged in “flagrant conduct,” and not to levy them if the taxpayer depends on the money, now or in the near future, for necessary living expenses (Internal Revenue Manual 5.11.6.3).
Vehicles, Homes, and Other Property
Physical seizures are much less common. Some property is exempt, and the IRS generally cannot seize your principal residence without written approval from a federal district court judge or magistrate judge (I.R.C. § 6334(e)(1)). If the amount of the levy is $5,000 or less, the IRS cannot levy your home at all (I.R.C. § 6334(a)(13)).
What Should I Do if the IRS Levies My Bank Accounts or Wages?
- Confirm who issued the levy. Read the notice of levy. Confirm it is the IRS and not a state agency, and note which tax years are listed.
- Contact the IRS right away. Call the number on the levy, but be prepared to wait. (The National Taxpayer Advocate reported that during the 2026 filing season, the IRS answered only 31 percent of calls to its Installment Agreement/Balance Due line, and callers waited an average of 45 minutes.) A representative with a power of attorney (Form 2848) can often move faster.
- Get into filing compliance. To resolve the underlying debt through a payment plan, an offer in compromise, or another option, you generally must be in filing compliance. This generally means filing all required tax returns, usually for the last six years. If you have any outstanding tax returns that have not been filed, work with a tax professional to file the missing returns as soon as possible.
- Ask for a release and propose a solution. The IRS rarely releases a levy unless someone asks. If a full release is refused, ask for a partial release to cover urgent bills such as rent or a mortgage.
- Appeal if the answer is no. You can ask to speak with the employee’s manager and then file Form 9423, Collection Appeal Request, under the Collection Appeals Program. If the levy is causing serious financial harm, the Taxpayer Advocate Service may be able to help; you can request its assistance on Form 911.
When Must the IRS Release a Levy?
Internal Revenue Code § 6343 requires the IRS to release a levy in certain situations, including when:
- The tax debt is paid, or the IRS’s ten-year period to collect it has expired;
- You enter into an installment agreement, unless the agreement provides otherwise;
- Releasing the levy will help the IRS collect the tax; or
- The levy is creating an economic hardship, meaning it prevents you from paying basic, reasonable living expenses.
To prove hardship, you will need to give the IRS a financial statement (usually Form 433-A or Form 433-F) with supporting documents. Releasing a levy for hardship does not erase the debt, and you still must file your returns.
Can I Recover Money Taken Through an IRS Levy?
Sometimes. The IRS may return levied money if the levy was premature or did not follow IRS procedures, if you entered into an installment agreement, or if returning the money will help collection. If the IRS levied property that belongs to someone else, such as a joint owner, that person generally has two years from the date of the levy to ask for it back. If an IRS error caused bank fees, you may be able to recover them using Form 8546.
Once the IRS has applied the funds to your debt, getting them back is much harder. Acting within the 21-day bank hold is your best chance to keep your money.
Can I Prevent Another IRS Levy?
A levy release is only temporary relief. To keep the IRS from levying again, you need a resolution of the underlying debt, such as:
- An installment agreement (monthly payment plan);
- Currently Not Collectible status, which pauses collection when you cannot pay your basic living expenses; or
- An Offer in Compromise, which settles the debt for less than the full amount when you qualify.
The right choice depends on your income, assets, and the time remaining on the IRS’s ten-year collection period.
Common Mistakes to Avoid
- Ignoring IRS mail. Most levies follow months of unanswered notices.
- Relying on an informal “extension.” IRS collection staff cannot extend your 30-day deadline to request a Collection Due Process hearing.
- Moving money or transferring property to relatives. The IRS can often undo these transfers or collect from the person who received the property, and hiding assets from the IRS can be a crime.
- Cashing out retirement accounts before getting advice. This can trigger income tax and early withdrawal penalties and may not be necessary.
Get Help With an IRS Bank Levy or Wage Levy
A levy is serious, but it is a problem you can solve if you take action. If you act quickly, get your returns filed, and present your finances accurately, a release or partial release is possible, followed by a payment plan or other resolution.
The McDowell Law Group represents individuals in IRS collection matters, including levy releases, collection appeals, installment agreements, and offers in compromise. We serve clients from our offices in Virginia Beach, Virginia, and Kitty Hawk, North Carolina. If the IRS has levied your bank account or wages, the 21-day clock may already be running. Contact us today at (757) 863-4890 to schedule a consultation.
This article is provided for general informational purposes only and does not constitute legal or tax advice, nor does it create an attorney-client relationship. Tax law and IRS procedures change, and outcomes depend on your specific facts. Please consult a qualified tax professional about your situation before acting.