Information about bank levies

When the levy is on a bank account, the Internal Revenue Code (IRC) provides a 21-day waiting period for complying with the levy. The waiting period is intended to allow you time to contact the IRS and arrange to pay the tax or notify the IRS of errors in the levy.

Generally, IRS levies are delivered via the mail. The date and time of delivery of the levy is the time when the levy is considered to have been made. In the case of a bank levy, funds in the account are frozen as of the date and time the levy is received. Normally, the levy does not affect funds you add to your bank account after the date of the levy.

I was included as signature on the bank account of my elderly mother to help her pay her bills. The IRS has levied the account for my tax debt. How can my mother secure a release of the levy?

Your mother or her power of attorney should call the IRS at the telephone number shown on your Form 668-A  and be prepared to explain why the funds in the bank account belong to your mother. The IRS may ask for substantiation that your mother is the owner of funds in a bank account.

The IRS levied my bank account after I had fully paid all of the tax liability. The bank has charged me a $100 fee for processing the levy. Can I recover the fee caused by IRS error?

You may be reimbursed for bank charges caused by erroneous levies by submitting Form 8546, Claim for Reimbursement of Bank ChargesPDF, to the IRS address on your copy of the levy. To be eligible to recover bank charges from the IRS, all of the following conditions must be satisfied:

  • The IRS must have caused the error.
  • You must not have contributed to continuing or compounding the error.
  • Before the levy, you must have responded timely to contacts and given information requested to establish your position.