IRS Levy Release: How to Stop a Bank Levy or Wage Garnishment

An IRS levy is the actual taking of your money to pay a tax debt, whether by freezing and seizing your bank account or by garnishing your paycheck. It is one of the most alarming things the IRS can do, and it is time-sensitive, especially with a bank levy, where there is a short window to act before the money is gone.

But a levy can be released, and in several defined situations the law requires the IRS to do it. Whiteford can help you move quickly to release an IRS levy, stop wage garnishment, and put a resolution in place so the levy does not return. See our IRS collections overview for how a levy fits alongside other enforcement tools.

How IRS levies work

A bank levy reaches the funds in your account at the moment it is served, and the bank must hold those funds for 21 days before sending them to the IRS. That 21-day hold is the critical window, the time to secure a release before the money leaves your account.

A wage levy works differently. It is continuous and takes part of each paycheck until the debt is paid or the levy is released. In most cases, before any levy, the IRS must send notice and offer a Collection Due Process hearing, one of the best opportunities to stop a levy before it starts.

When the IRS must release a levy

The law requires the IRS to release a levy in several defined situations:

• When the underlying liability is paid or becomes legally unenforceable
• When an installment agreement is in effect that does not provide otherwise
• When the levy creates an economic hardship that prevents you from meeting basic, reasonable living expenses
• When releasing the levy will facilitate collection

Certain property is also exempt from levy by law. Identifying which of these applies to your situation turns a levy from a crisis into a solvable problem.

How to get a levy released

Speed and the right basis matter. With a bank levy, the goal is to secure a release within the 21-day hold period. With a wage garnishment, the goal is to stop the ongoing reduction from each paycheck.

Common paths to release include demonstrating economic hardship, putting a resolution in place such as an installment agreement, an offer in compromise, or currently-not-collectible status, and exercising your appeal and Collection Due Process rights. In each case, the IRS needs to see a clear financial picture and a credible plan, presented the right way.

What a tax attorney does

A tax attorney moves fast, which is the single most important factor with a bank levy on the clock. We contact the IRS, present financial information supporting the requested relief, and work to negotiate a resolution of the debt to reduce the likelihood of future enforcement.

Where appropriate, we may request return of levied funds or property under applicable procedures and use appeal and Collection Due Process rights to protect you. Our focus is on addressing immediate enforcement and working toward an underlying resolution to promote longer-term stability.

Why Whiteford

Whiteford's tax controversy practice handles IRS collection matters, including levies and wage garnishments, and has experience resolving audits, appeals, and collection disputes. The practice is led by attorney Michael March, who focuses on tax controversy and defense. Because a levy is enforcing an underlying balance, we address both the levy and the debt driving it.