Yes, and if the money is still sitting at the bank you have a limited window to act.

When the IRS serves a levy on a bank, I.R.C. section 6332(c) requires the bank to surrender the funds only after 21 days from service of the levy. During those 21 days the account is frozen but the money has not gone to the IRS. That period is the entire practical opportunity to obtain a release. It runs from service on the bank, not from the day you noticed the freeze, and banks generally do not extend it.

The IRS ordinarily cannot reach the account without first having assessed the tax, issued notice and demand, and given at least 30 days written notice of intent to levy and of the right to a Collection Due Process hearing. If you requested a CDP hearing within the 30 days, levy is suspended. If you did not, it is not.

Lien and Levy Are Not the Same Thing

A federal tax lien is a claim. Under I.R.C. section 6321 it attaches to all of the taxpayer's property upon assessment, demand, and nonpayment, and under section 6322 it relates back to the assessment date. It secures the debt. It does not move money.

A levy is a seizure. Section 6331 authorizes the IRS to take property administratively, without a court order and without suing. That is the feature that distinguishes tax collection from ordinary creditor collection: a commercial creditor must obtain a judgment first, and the IRS does not.

Confusing the two costs time. A taxpayer who receives a Notice of Federal Tax Lien and believes the accounts have been seized panics unnecessarily. A taxpayer who receives a Final Notice of Intent to Levy and treats it as another balance-due letter loses the CDP window.

The Sequence That Precedes a Levy

Assessment. The liability is recorded, whether from a filed return, an examination, a substitute for return, or a default after a notice of deficiency.

Notice and demand. I.R.C. section 6303 requires notice and demand for payment, generally within 60 days of assessment.

Balance-due notices. A series of computer-generated notices follows. These are not levy notices and requesting a CDP hearing in response to them is premature.

The 10-day rule. Under section 6331(a), levy authority arises if the taxpayer neglects or refuses to pay within 10 days after notice and demand. The last sentence of section 6331(a) permits immediate levy where the IRS finds collection is in jeopardy.

The 30-day notice of intent to levy. Section 6331(d)(2) requires notice at least 30 days before the levy, given in person, left at the dwelling or usual place of business, or sent by certified or registered mail to the last known address. The only exception in section 6331(d) is jeopardy. Section 6331(d)(3).

The CDP notice. Section 6330 separately requires notice of the right to a hearing before the IRS Independent Office of Appeals. In practice the IRS combines these in one letter, usually LT11 or Letter 1058, Final Notice of Intent to Levy and Notice of Your Right to a Hearing.

The levy.

The CDP requirement has its own exceptions, and they are in section 6330(f), not section 6331(d): jeopardy, a levy on a state to collect from a state tax refund, a disqualified employment tax levy as defined in section 6330(h), and a federal contractor levy. In those cases the levy may precede the hearing, but a hearing must be offered within a reasonable time afterward.

The 30-Day CDP Window

This is the decision point that matters most.

A timely request for a CDP hearing, filed on Form 12153 within 30 days of the levy notice, suspends the levy action and suspends the collection statute and certain other limitations periods while the hearing and any appeal are pending. I.R.C. section 6330(e)(1). It also preserves the right to petition the Tax Court within 30 days of Appeals' determination. Section 6330(d)(1).

A late request gets an equivalent hearing under Treas. Reg. section 301.6330-1(i) instead, available for one year. An equivalent hearing produces a decision letter rather than a notice of determination. It does not suspend levy, it does not suspend the collection statute, and it is generally not reviewable in the Tax Court.

That is the whole difference. Same conference, same Appeals officer, radically different rights.

At a CDP hearing you may raise collection alternatives, spousal defenses, and challenges to the appropriateness of the collection action. Section 6330(c)(2)(A). You may challenge the underlying liability only if you did not receive a notice of deficiency and did not otherwise have an opportunity to dispute it. Section 6330(c)(2)(B).

One caution on the judicial side. In Commissioner v. Zuch, 605 U.S. ___ (2025), the Supreme Court held that the Tax Court loses jurisdiction under section 6330 once the IRS is no longer pursuing the levy, because the only reviewable determination is whether the levy may proceed. A CDP case used as a vehicle to litigate something else can therefore evaporate if the IRS withdraws the levy.

Bank Accounts, Wages, and What Each Levy Actually Does

Bank accounts. Form 668-A, Notice of Levy, is used for accounts and receivables held by a third party. It is a one-time snapshot levy: it reaches the balance on the day of service and does not attach to later deposits. The bank holds the funds for 21 calendar days under section 6332(c) and, on the next business day after the holding period expires, must surrender the funds up to the amount of the levy. If the balance was low on the day of service, a second levy is required to reach later deposits.

Wages. Form 668-W, Notice of Levy on Wages, Salary, and Other Income, is continuous. It attaches until released. There is no 21-day hold; the employer begins withholding on the next pay period, remitting everything above the exempt amount.

The wage exempt amount is computed under I.R.C. section 6334(d). Because the personal exemption amount under section 151(d) is zero, section 6334(d)(4) supplies the formula: the standard deduction plus an amount per dependent, divided by 52 for weekly pay. The employer applies the table in IRS Publication 1494, which is mailed with the Form 668-W. Confirm the current revision before relying on any figure.

Federal payments and Social Security. Under section 6331(h) the IRS may impose a continuous levy on up to 15 percent of specified federal payments, and that levy reaches categories that section 6334 would otherwise exempt. Social Security old-age, survivors, and disability benefits under Title II are subject to the 15 percent levy through the Federal Payment Levy Program, and the 15 percent is taken regardless of how little remains. Supplemental Security Income under Title XVI is excluded, as are lump-sum death benefits and children's benefits. Since October 2015 the IRS has not systemically levied Social Security disability benefits through the program, though manual levy remains possible, and since 2011 a low-income filter excludes taxpayers below poverty-guideline thresholds. The program notice is CP91 or CP298, giving 30 days.

What Is Actually Exempt

Section 6334(a) lists the exemptions and section 6334(c) forecloses any others: no property is exempt except what subsection (a) makes exempt.

The list includes wearing apparel and school books; fuel, provisions, furniture and personal effects; books and tools of a trade or profession; unemployment benefits; undelivered mail; certain annuity and pension payments; workers' compensation; judgments for the support of minor children; the minimum wage exemption; certain service-connected disability payments; certain public assistance; and, subject to important limits, residences.

Two traps.

The pension exemption in section 6334(a)(6) is narrow. It covers Railroad Retirement Act annuities, Railroad Unemployment Insurance benefits, the Medal of Honor special pension, and armed forces retired pay annuities. Private pensions, 401(k) accounts, and IRAs are not exempt from levy.

The residence protection is conditional. Under section 6334(a)(13)(A) a residence is exempt only where the levy does not exceed $5,000. A principal residence within the meaning of section 121 is protected by section 6334(a)(13)(B) only to the extent provided in section 6334(e), which requires written approval by a United States district court judge or magistrate before the IRS may levy on it.

Getting the Levy Released

I.R.C. section 6343(a)(1) requires release on any of five grounds: the liability is satisfied or has become unenforceable by lapse of time; release will facilitate collection; the taxpayer has entered an installment agreement under section 6159, unless the agreement provides otherwise; the levy is creating an economic hardship due to the taxpayer's financial condition; or the fair market value exceeds the liability and a partial release can be made without hindering collection.

In practice the arguments that work in the 21-day window are hardship, an installment agreement, and procedural defect.

Hardship means the levy prevents the taxpayer from meeting basic reasonable living expenses. It requires a financial statement, usually Form 433-A or 433-B, supported by documents. It is the most common ground and the one most often presented too vaguely to succeed.

An installment agreement triggers mandatory release under section 6343(a)(1)(C), and section 6331(k)(2)(C) bars levy while an agreement is in effect.

Procedural defect means the notice requirements were not met: no notice and demand, no 30-day notice, a CDP notice sent to an address that was not the last known address, or a levy issued while a timely CDP request or a pending offer in compromise barred it. Section 6331(k)(1) prohibits levy while an offer is pending, for 30 days after rejection, and during a timely appeal of the rejection.

Money already sent to the IRS is harder. Section 6343(b) permits return of wrongfully levied property, and money may be returned within two years from the date of the levy. Section 6343(d) permits return in other cases, including where the levy was premature or not in accordance with administrative procedures, where an installment agreement has been entered, where return will facilitate collection, or where return would be in the best interest of the taxpayer, as determined by the National Taxpayer Advocate, and of the United States.

Third-party property. If the account holder is not the assessed taxpayer, the remedy is a wrongful levy suit under I.R.C. section 7426, brought in federal district court within two years of the levy under section 6532(c)(1), with limited extensions where an administrative request for return was made.

Taxpayer Advocate Service. Where a levy is causing significant hardship, Form 911 requests a Taxpayer Assistance Order under I.R.C. section 7811. The statute defines significant hardship to include an immediate threat of adverse action, a delay of more than 30 days in resolving an account problem, significant costs including professional fees, and irreparable injury. This route can move quickly and should not be overlooked.

What to Do Today

Determine the levy date, because the 21 days run from service on the bank. Call the bank and get the service date and the amount frozen in writing.

Obtain account transcripts for every year to establish what was assessed, when, and what notices issued.

Determine whether a CDP notice was issued and to what address, and whether the 30-day window is still open. If it is, file Form 12153 immediately; that alone stops further levy action.

Assemble a financial statement with supporting documents if hardship is the argument. A release request without documentation is a request to be denied.

Identify the assigned revenue officer or the ACS unit from the notice, because the release must come from the function holding the case.

And decide what the resolution will be. A levy release obtained without a collection alternative in place is temporary.

A bank levy has a 21-day clock that runs from service on the bank, and the arguments that obtain a release require documentation prepared quickly. Chase Counsel accepts selected federal tax controversy engagements, including levy release and collection matters. Learn more at www.ChaseCounsel.Com/federal-tax-controversy.

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This article discusses federal tax procedure generally and is not legal advice for any particular taxpayer. Collection notices, deadlines, exemptions, and release grounds depend on the notices issued and the taxpayer's circumstances. Dollar figures and IRS standards change; verify current amounts before relying on them.