Key Takeaways
Yes, it is possible to stop an IRS bank levy — but timing is critical. You have 30 days after receiving a Notice of Intent to Levy to request a Collection Due Process (CDP) hearing and prevent the levy from happening.
Even if your bank account is frozen, you may still have options during the 21-day hold period. Once a levy is issued, banks must hold your funds for 21 days before sending them to the IRS. During that time, you may be able to secure a levy release by setting up a payment plan, proving financial hardship, or correcting an IRS error.
Long-term resolution is required to prevent future levies. Stopping a levy temporarily isn’t enough; you must resolve the underlying tax debt through an installment agreement, Currently Not Collectible (CNC) status, an Offer in Compromise, or full payment to avoid future enforcement.
Immediate Steps You Should Take Before The Levy Happens
If you receive a Notice of Intent to Levy, you must act quickly to prevent the IRS from placing a freeze on your bank accounts.
1. File a CDO Hearing Request
Under Internal Revenue Code §6330, you have 30 days to request a Collection Due Process (CDP) Hearing (Form 12153) from the date of the levy notice. If filed on time, this will pause collection actions, including bank levies. The IRS is prohibited from placing a levy on your accounts while the hearing is pending.
Be sure to send Form 12153 by certified mail to prove you requested the hearing within the 30-day window. If you fail to file within 30 days, the IRS can still move ahead with freezing your accounts.
2. Speak With a Tax Professional
The next thing you should do after receiving an IRS bank levy notice is reach out to a tax professional. They can ensure you don’t miss any important deadlines and help with the CDP hearing request, if needed. Additionally, a tax professional can negotiate with the IRS on your behalf before any enforcement action begins. This may include submitting an Offer in Compromise, requesting hardship relief (CNC status), or setting up an installment agreement to help you pay off your tax debt over time. They’ll evaluate your financial situation and determine the best strategy moving forward.
How to Stop an IRS Bank Levy From Happening
Once you request the CDP hearing, you’ll need to find a solution for paying the back taxes you owe. The hearing only halts collections for a temporary period. Having one of the following options in place, however, will ensure that collection actions such as wage garnishment and bank levies do not resume.
Pay in Full
The quickest way to stop a bank levy is to pay your tax balance in full. Of course, if you were able to do so, you probably would not be in this situation. Not to worry, there are other options available.
Set Up a Payment Plan
The most common way to avoid a bank levy is to apply for an installment agreement. This allows you to set up a payment plan where you can pay your tax debt over several months or years.
For streamlined installment agreements, your payment is determined by the amount you owe divided by the number of months you’ll be paying (generally up to 72 months). No financial review is required.
Other payment plans are based on your ability to pay, as determined by the IRS. This is done using financial information obtained from Form 433-F or 433-A for individuals, or Form 433-B for businesses.
Once approved, the IRS will not levy your wages or your bank accounts, unless you default on your agreement. Be sure to make all payments on time!
Prove Financial Hardship
If you are having trouble paying for basic living expenses, such as rent, food, and utilities, the IRS may stop the bank levy due to economic hardship. You’ll need to apply for Currently Not Collectible (CNC) status and provide evidence of your financial situation, as well as participate in periodic reviews. Once your finances improve, you’ll need to get into a payment plan or request an OIC to avoid reinstatement of the bank levy or other collection actions. If you remain in CNC status until the statute of limitations runs out for collecting the debt, however, the amount you owe will be forgiven.
Submit an Offer in Compromise
Another option for stopping a bank levy is an Offer in Compromise (OIC). An OIC allows you to settle your tax debt for less than you owe. Although the process is complicated and long, you’ll be protected as soon as you submit your application and throughout the consideration period.
If your OIC is denied, you’ll have 30 days to appeal or apply for another repayment option. Failure to do so will result in the IRS resuming collection actions. They do not need to file a new Notice of Intent to Levy if one was sent previously. They can proceed immediately with freezing your accounts.
How to Stop a Bank Levy After It’s in Place
Nothing is scarier than going to make a withdrawal from your account and finding there’s a 21-day hold on your funds. Although dealing with a bank levy after it’s in place is more difficult, it’s not entirely impossible to stop.
What is the 21-Day Hold Rule?
If you fail to respond to the Notice of Intent to Levy or enter into a repayment option before the 30 days expire, the IRS will move forward with levying your bank accounts. When this happens, the bank will place a 21-day hold on the amount the IRS is requesting (or whatever is available up to that amount).
During this time, the bank cannot disburse the funds to you, the IRS, or anyone else, including other creditors.
Options For Protecting Your Money
Thankfully, you do have options for getting the IRS to release the bank levy during the 21-day hold – but you must act quickly!
The IRS may remove the levy if you:
- Set up a payment plan
- Provide evidence of economic hardship (CNC status)
- Prove the levy was issued in error (payment already made or an IRS mistake)
If you do not take any action by the end of the 21 days, the funds will be sent to the IRS on the next business day. At that point, it’s pretty much impossible to get them back.
Bottom Line
An IRS levy notice must be taken seriously. It’s one of the government’s strongest collection tools and can put you in financial jeopardy. Although you can set up a payment plan or request an OIC or CNC status on your own, we highly recommend working with a tax professional. A tax professional can help you:
- Protect your rights
- Prevent or stop collection enforcement
- Choose an affordable tax resolution
- Avoid costly mistakes
If you’re unsure whether your levy can still be stopped, contact a tax professional to review your case and explore your options.