IRS Bank Levies - What You Need to Know
You’re not a tax resolution expert. And that’s okay.
You’ve got your lane—whether that’s tax preparation, bookkeeping, helping clients refinance, untangling a divorce, managing investments, or filing for bankruptcy. But then, right in the middle of a routine meeting, your client says,
"The IRS just levied my bank account. What am I supposed to do?"
Now what?
You’re not about to dive into the IRS code or start arguing with Revenue Officers on your client’s behalf.
But you want to help.
You want to steer them toward the right support before the IRS drains their account—and maybe drags your work off course in the process.
The article below is what you need to know about IRS bank levies—what they are, how they work, and most importantly, how your client can stop one (or at least soften the blow).
Why This Matters to You (and Your Client)
When a client’s bank account gets levied, all hell breaks loose.
Funds are frozen. Bills go unpaid. Payrolls miss. Refinances collapse. Bankruptcy plans get scrambled.
Most professionals I work with don't have the expertise to handle the IRS side of things. But they do want to make sure their clients get the help they need—and their own work to keep moving.
The key is understanding how bank levies work, what warning signs to watch for, and when to refer the client to someone who can resolve it before the funds disappear.
Five Things
➲ There are five key things you should know if your client is facing—or worried about—a bank levy:
What an IRS bank levy is (and how it’s different from a wage garnishment)
How the IRS levies a bank account
What the 21-day freeze means
What options your client has to stop or reverse a levy
How to help your client avoid this entirely next time
1. What Is an IRS Bank Levy?
An IRS bank levy is when the IRS seizes money from a taxpayer’s bank account to pay for unpaid taxes.
It’s a one-time event (unlike a wage garnishment, which continues until the debt is paid). The IRS contacts the bank, the bank freezes the funds in the account on that day, and—if no action is taken—the money gets sent to the IRS 21 days later.
It doesn’t affect future deposits. But if your client has $20,000 in an account and a levy comes through today, they won’t see that money again unless the issue is resolved before day 21.
2. How the IRS Levies a Bank Account
Here are the formalities (and luckily, there are some).
➲ Before the IRS can touch a bank account, they must:
Assess the tax
Send a bill, and
Send a final notice of intent to levy with a 30-day window to appeal or pay
If your client ignores those notices, the IRS sends Form 668-A to their bank. The bank then freezes the funds and notifies the client. Most banks charge a processing fee, too (typically around $100), to make things worse.
➥ Worth noting: The IRS can issue multiple levies over time, and they don’t need to send a new warning each time. Once they’ve given proper notice for a specific tax period, they can act again without additional heads-up.
3. The 21-Day Freeze Window
This is the golden window—and it’s often wasted.
Once the bank receives the levy notice, it freezes the account for 21 days. That time exists to allow the taxpayer to resolve the issue: dispute the debt, prove financial hardship, or make arrangements.
If no action is taken in those three weeks, the bank funds are transferred to the IRS.
➥ Here’s what’s crucial: If a client contacts the right person early in that 21-day window, they often still have options.
But if they wait until day 20, the outcome is usually a foregone conclusion.
4. How a Client Can Stop or Reverse a Levy
➲ There are a few ways a levy can be stopped, even after the freeze:
Paying the tax debt in full (not common, but fast)
Proving financial hardship, backed by documentation
Identifying IRS procedural errors
Showing that levied funds were exempt or belonged to someone else
Filing for bankruptcy, which can trigger an automatic stay
The challenge is knowing which path makes sense in light of the circumstances—and getting the IRS to agree.
That’s where experience matters.
The rules are dense. The timelines are tight. And the IRS isn’t going to stop just because someone asks nicely.
5. How to Help Your Client Avoid It Next Time
The IRS doesn’t like surprises any more than your client does.
Most levies happen because the taxpayer didn’t respond to notices or didn’t know what they meant. Once the IRS starts enforced collection, it’s because they’ve been ignored.
The better route is early engagement: filing any missing returns, resolving the balance through payment plans or settlement options, and staying current going forward.
Clients need to act before the levy arrives.
TL;DR – What You Should Know
⏩ An IRS bank levy is a one-time seizure of funds in a client’s bank account.
⏩ The IRS must give proper notice before levying (in most cases).
⏩ The bank freezes funds for 21 days, then sends them to the IRS.
⏩ Clients can stop or reverse the levy—but only if they act fast.
⏩ The IRS can levy multiple times without sending another notice.
The Takeaway
When a client tells you the IRS is threatening to freeze their account—or already has—you don’t need to become the expert.
You just need to know what’s happening and who can help.
It protects your client, keeps your work moving, and makes you the professional who knows exactly what to do when everything’s about to go sideways.
Let's Talk...
➤ Have you ever had a client deal with a bank levy, or come close?
➤ What happened, and how did it affect your work with them?
