When Form 668-A hits your bank, your funds are immediately frozen. For business owners, this can halt payroll; for individuals, it can block rent, mortgage, or other essential payments. This enforcement action doesn’t just signal noncompliance; it instantly restricts operating capital and personal liquidity, often forcing difficult choices between tax obligations and essential living expenses.
You only have 21 days to act, and waiting could make recovery nearly impossible. Our team of experienced federal tax attorneys can intervene quickly, negotiate directly with the IRS, and work to release your frozen funds before they are permanently applied to your tax debt.
Navigating this stage of the collection process requires a precise understanding of federal tax procedure. The window for defense is statutorily limited, and strategic intervention must occur before funds are permanently remitted to the U.S. Treasury.
An IRS Bank Levy is governed by strict federal statutes, primarily IRC § 6331. This code section grants the IRS the power to levy upon all property and rights to property belonging to a taxpayer who has neglected or refused to pay a tax liability after demand.
However, this authority is not absolute. To legally enforce a levy, the IRS must adhere to specific due process requirements mandated by the Taxpayer Bill of Rights and the Internal Revenue Code.
Under IRC § 6330, this 30-day window allows the taxpayer to request a Collection Due Process (CDP) Hearing. Filing a timely CDP request acts as a statutory brake, halting levy actions while the case is reviewed by the IRS Office of Appeals. The IRS must generally satisfy a specific procedural chain:
The instrument used to execute a bank levy is Form 668-A, Notice of Levy. This document is issued directly to third parties holding the taxpayer’s assets, typically banks or credit unions.
Upon receipt, the financial institution is legally compelled to freeze all funds held in accounts associated with the taxpayer’s Social Security Number (SSN) or Employer Identification Number (EIN). This freeze applies up to the amount of the tax debt. The bank functions as a compliance agent for the federal government in this process.
Crucially, the bank does not remit the funds to the IRS immediately. IRC § 6332(c) mandates a 21-day holding period. During these 21 days, the IRS freezes your funds. They are removed from the taxpayer’s available balance but remain in the bank’s custody.
This statutory window is the primary opportunity for legal intervention. It is designed to allow time to resolve the dispute, prove economic hardship, or demonstrate procedural error. If a Levy Release is not issued to the bank by the 22nd day, the funds must be remitted to the IRS.
It is important to distinguish a bank levy from a continuous wage garnishment.
When a levy is discovered, the response must be immediate and disciplined. The 21-day clock runs consecutively, including weekends and holidays. Engaging a bank levy lawyer ensures your funds are protected during the holding period.
The most robust defense is to prevent the issuance of Form 668-A through proactive resolution. If a Final Notice has been received but a levy has not yet hit the bank, several statutory protections can be invoked.
If funds are currently frozen, the objective shifts to securing a release within the holding period. Release of a levy is governed by IRC § 6343. The IRS is required to release a levy if it determines that the action creates an economic hardship.
This legal standard is met if the levy prevents the taxpayer from meeting basic living necessities. Documentation of income and allowable expenses is required to substantiate this claim. A release may be mandated if the levy was issued in error. Common grounds include:
The burden of procedural compliance rests on the government. To sustain a levy, the administrative record must reflect that all notices were sent to the taxpayer’s last known address and that the assessment was procedurally valid.
Defects in the notice process, assessment timing, or failure to consider alternative collection resolutions can serve as grounds for a release or a favorable decision in Appeals.
Failure to resolve the levy within the holding period typically results in the permanent remittance of funds to the U.S. Treasury. Once applied to the tax debt, recovery is legally complex and rarely successful. Furthermore, a bank levy often signals that the IRS has moved the case to active enforcement, which may lead to:
At this critical stage, professional representation is essential for effective risk management. McCauley Law Offices ensures your procedural rights are fully asserted, the government stays strictly within its statutory and constitutional boundaries, and unnecessary exposure is minimized.
We follow a structured protocol to achieve levy relief:
Contact McCauley Law Offices to arrange a confidential consultation and discuss your case.
Question | Answer |
What legal authority allows the IRS to levy a bank account? | The IRS can seize property for unpaid taxes under IRC § 6331. This requires proper notice and gives you the right to a hearing before enforcement. |
Can an IRS Bank Levy be reversed after funds are transferred? | Once funds are sent to the Treasury, recovery is difficult. Reversal is possible only if there’s a statutory error, wrongful levy, or severe economic hardship under IRC § 6343(d). |
Can the IRS issue multiple bank levies? | Yes. A levy only captures funds in the account at that moment. If the tax debt remains, the IRS can levy future deposits or other accounts. |
Does filing a Collection Due Process request stop enforcement? | Yes. A timely request for a Collection Due Process (CDP) Hearing imposes a statutory stay on levy actions. The IRS generally cannot seize assets while the hearing is pending and the appeal is under review. |
How does the IRS determine economic hardship? | Economic hardship exists if the levy prevents you from meeting basic living expenses. The IRS compares income to allowable standards for housing, food, and healthcare. |
Can the IRS levy business operating accounts? | Yes. Business accounts are subject to levy if taxes are owed, which can disrupt payroll or vendor payments. Immediate action is needed to protect operations. |
A joint bank account was subject to a substantial levy by the IRS, causing the taxpayer to lose over $100,000. Despite the joint account being shared with their non-liable mother, the IRS acted within its powers to seize the funds. Distressed and seeking resolution, the taxpayer contacted McCauley Law office. Our firm immediately initiated negotiations with the IRS, ensuring the release of a six-figure refund directly to the mother’s bank account. Furthermore, we successfully entered an agreement with the IRS to address the taxpayer’s outstanding tax debts. This case serves as a reminder that taxpayers should be vigilant about the IRS’s ability to levy any associated assets.
