Here is the truth about levy releases: the IRS has much less discretion than most people think.
IRC § 6343(a)(1) says the IRS "shall release the levy" and promptly notify the person levied (your bank) when one of five conditions exists. Not "may." Shall. The fight is almost never about whether the law allows a release. It is about whether you can show the IRS, fast and with paper, that your situation fits.
The five mandatory release grounds
1. The liability is paid or has become unenforceable
Section 6343(a)(1)(A). If the tax is fully paid, or the collection statute has run, the levy must be released (IRM 5.11.2.3.1.1 and 5.11.2.3.1.2). Watch the timing on the statute, though. A bank levy served before the collection period expires is still enforceable even if the 21-day hold ends after the deadline (IRM 5.11.2.3.1.2). See the collection statute and bank levies.
2. Release will help the IRS collect
Section 6343(a)(1)(B). This sounds odd until you see the IRM's examples. In one, a bank levy reaches less than the full debt, the taxpayer wants to post a bond to get the tax lien released, and the bank's bond department can issue the bond from the levied funds. The IRS releases the levy so the money can buy the bond (IRM 5.11.2.3.1.3). If you have a plan that gets the IRS paid faster than the levy would, this is the ground.
3. You entered an installment agreement
Section 6343(a)(1)(C). If you enter an installment agreement under § 6159, the levy must be released "unless such agreement provides otherwise." The IRM's example is a bank levy followed by an agreement that expressly keeps the levy in place, in which case this ground does not apply (IRM 5.11.2.3.1.6). Read the agreement. See installment agreements and bank levies.
4. The levy is creating an economic hardship
Section 6343(a)(1)(D). This is the ground I use most often for individuals. The Treasury regulation and the IRM define hardship as the levy leaving you unable to pay reasonable basic living expenses (IRM 5.11.2.3.1.4). It requires financial analysis, good faith, and full disclosure. It has its own guide: economic hardship release.
5. Part of the property is worth more than the debt
Section 6343(a)(1)(E). If the fair market value of the levied property exceeds the liability and part of it can be released without hindering collection, the IRS must release that part (IRM 5.11.2.3.1.5). With cash in a bank, the levy is already capped at the amount on the form, so this ground matters less for bank accounts than for other assets.
Releases the law requires for other reasons
Section 6343 is not the only path. The IRM adds two categories that matter a lot for bank levies (IRM 5.11.2.3.1):
- Bankruptcy. A levy on property of a taxpayer in bankruptcy generally violates the automatic stay of 11 U.S.C. § 362(a) and must be released. The IRS is supposed to begin corrective action within two workdays of learning of a stay violation. See bankruptcy and bank levies.
- Levies that violate the Code or regulations. The IRM's example is a levy issued while your CDP hearing is pending. Others include a levy while an installment agreement request or offer in compromise was pending, which § 6331(k) forbids.
And if the money in the account is not yours, the owner has a separate route under § 6343(b), the wrongful levy claim. See wrongful levy claims and joint accounts.
What proof the IRS will want
The regulation lets the IRS require "any supporting documentation as is reasonably necessary" to decide whether a release condition exists (Treas. Reg. § 301.6343-1(a), as quoted in IRM 5.11.2.3.1). In practice:
| Ground | Typical proof |
|---|---|
| Paid in full | Payment confirmation, canceled check, credit card confirmation number (IRM 5.11.2.3.5) |
| Installment agreement | Signed or approved agreement; current returns filed |
| Economic hardship | Form 433-A or 433-F, bank statements, bills, eviction or shutoff notices |
| Bankruptcy | Case number and filing date |
| Illegal levy | Copy of your timely CDP request, pending IA or offer confirmation |
Who can release it
Start with the name and phone number printed on the levy. Treas. Reg. § 301.6332-3(d)(1) specifically tells depositors to call the number on the face of the notice of levy to report an error so the IRS can review it quickly.
If the levy came from the Automated Collection System, you will reach a call site. If it came from a revenue officer, you will reach a person assigned to your case. Either way, be ready with the levy, the periods, and your proof in one place.
If the employee will not release, ask for a manager the same day. Then consider:
- The Collection Appeals Program. Levies that have been or will be taken can be appealed through CAP, and Appeals aims to resolve CAP cases quickly (IRM 5.1.9.4). See the Collection Appeals Program.
- The Taxpayer Advocate Service. TAS takes cases involving economic harm and immediate threats of adverse action (IRM 13.1.7). See the Taxpayer Advocate and bank levies.
- A CDP hearing, if your 30-day window from the CDP notice is still open. See CDP hearings.
Getting the release to the bank
A release only matters if your bank has it before it pays the IRS. Under Treas. Reg. § 301.6332-3(c)(1), during the hold the levy is released only when the IRS notifies the bank. The release document is Form 668-D, Release of Levy/Release of Property from Levy, and it can release the levy in full or in part (IRM 5.11.2.3.4). Releases are generally mailed, but the IRM allows faxing when a levy must be released quickly (IRM 5.11.2.3.3).
Three practical points:
- Ask for a fax to the bank's levy department if you are within a week of day 21.
- Ask for a copy of the release for yourself.
- Call the bank to confirm it received and processed the release. Do not assume.
Partial releases are real
The IRS does not have to choose between all or nothing. IRM 5.11.2.3.4 gives an example of a business whose account is levied, which provides its financial information and is granted a partial release of bank deposits to cover payroll, with the levy continuing to attach to the rest. If you only need part of the money to survive, ask for part.
What if day 21 passes?
Once the bank pays over, the question changes from release to return. Section 6343(d) lets the IRS return levied property if the levy was premature or not in accordance with procedure, if you entered an installment agreement, if return will help collection, or if return is in your best interest with the consent of you or the National Taxpayer Advocate. A written request must generally be made within two years of the levy. See getting levied money back.
A release is not the end
Section 6343(a)(3) says a release "shall not prevent any subsequent levy on such property." A levy released because of an installment agreement can come back if the agreement defaults. A hardship release can be revisited if your finances change. The release buys you room. What you do with the room decides whether you see another levy.
The law requires the release. Your paperwork proves you qualify. Do not show up without it.
For more on how the firm handles levy releases, see the tax levies page at getirshelp.com.