IRS Bank Levy (Form 668-A) and Wage Levy (Form 668-W): The 21 Days, the Exempt Amount and the Release

What Form 668-A(c) and Form 668-W(c) do, and why the levy issued

A levy is the IRS taking property to pay an assessed tax, and it issues after the bill, the Final Notice of Intent to Levy, and the 30 days to request a hearing have all run. The authority is section 6331 of the Internal Revenue Code, and most levies go to a third party holding something of yours. In our files the usual reason is simple: the LT11 or Letter 1058 went to an old address or sat unopened, and the 30-day window closed.

The bank levy on Form 668-A(c) freezes the funds in the account on the day the bank receives it, up to the amount owed, and the bank holds them for 21 days under section 6332(c). It reaches only the money present that day, so a deposit that lands the next morning is yours. The wage levy on Form 668-W(c) is served on your employer under section 6331(e) and is continuous: payroll withholds every pay period until a release arrives, leaving you the exempt amount in Publication 1494, which depends on the filing status and dependents you claim on the statement you return within three days. If the statement does not come back, the exemption is computed as married filing separately with no dependents, the smallest figure in the table, and your employer has no choice in any of it.

Section 6331 also reaches accounts receivable through the customers of a business, rents through the tenant, retirement accounts, state tax refunds, and 15 percent of Social Security benefits through the Federal Payment Levy Program.

The 21 days, the next payroll, and what happens if nothing is done

A bank levy gives you 21 days from the day the bank received it, a wage levy gives you until the next payroll, and both keep running until a release reaches the bank or the employer. The bank counts calendar days from receipt, not from the date printed on the form, and after the 21st day it sends the money to the IRS. A wage levy has no end date, so payroll keeps withholding until the IRS releases the levy or the balance, with interest and penalties, is paid in full. Nothing else happens on its own: a levy is not a lien, which is a separate notice, Letter 3172, and the IRS does not reach your other accounts unless it serves another form.

What to do in the first 30 days

The order is fixed: find the date, find who issued the levy, get the numbers together, and call with a proposal, because the IRS releases a levy for a reason and not for a request.

1. Get the date the bank or your employer received the levy, and count the 21 days from it.
2. For a wage levy, return the dependents statement to your employer within three days.
3. Read the levy for who issued it: a phone number alone means the Automated Collection System, a call center, and a revenue officer’s name means a person is assigned.
4. File every missing return, because the IRS will not approve a payment plan or hardship status while a required return is unfiled.
5. Complete the financial statement, Form 433-F for a call center case or Form 433-A for a revenue officer.
6. Check your transcripts for a payment plan request, offer or hearing request that was pending when the levy issued, because section 6331(k) bars a levy while one is.
7. Call with a proposal, ask for Form 668-D to be faxed while you are on the phone, and write down the name and badge number of the person you spoke with.

The grounds for releasing an IRS bank levy or wage levy

Section 6343 lists the reasons the IRS releases a levy, and every option below is a way of giving it one.

• Economic hardship. The levy leaves you unable to meet basic living expenses. A wage levy that causes hardship has to be released, a bank levy that does may be, and the release usually comes with currently not collectible status.
• An installment agreement. Once an agreement under section 6159 is in place the IRS releases the levy, and a pending request bars a new one under section 6331(k).
• An offer in compromise. A settlement under section 7122 for less than the balance. An offer takes months, so the release comes first, on another ground.
• The liability is paid or no longer enforceable. The balance was paid, or the ten-year collection statute under section 6502 ran before the levy issued.
• Release will help collection. For a business, the argument when a bank levy on the operating account stops payroll.
• The levy was premature or against procedure. The Final Notice was never sent or went to the wrong address, or a payment plan request, offer or hearing request was pending. The levy comes off, and under section 6343(d) money already sent can come back.
• A wrongful levy claim. The person whose money was taken, such as the other name on a joint account, files a wrongful levy claim with the IRS within two years.

If the LT11 or Letter 1058 is less than 30 days old, a Collection Due Process (CDP) hearing request on Form 12153 stops further levy action while Appeals reviews the case.

What Brotman Law does when a levy is running

We get the release first and the resolution second, and when the file is ready both happen in the same call. Day one, Form 2848, the power of attorney, goes to the IRS, and we pull the account transcripts and confirm the receipt date with the bank or payroll. Then we check the levy against the procedure: whether the Final Notice went to a good address, whether a payment plan request, offer or hearing request was pending, and whether any year is past its statute, because a levy that fails those tests comes off on procedure. If it is sound, we build the financial statement, decide with you which resolution the numbers support, and call the IRS with the proposal in hand, asking for Form 668-D to be faxed before the call ends. If the answer is no, a Collection Appeals Program request on Form 9423 goes in the same day.

Do you need a lawyer for a levy?

Not always, and the honest line is the size of the balance and who is on the other side of the phone. A balance under roughly $50,000 with no revenue officer, no lien and no business payroll tax can usually be handled with an IRS payment plan you set up yourself, and a bank levy on that kind of account often comes off the same way: call the number on the levy with every return filed, propose a monthly payment that pays the balance within 72 months, and ask for the release to be faxed while you are on the line. The monthly engagement fits when a revenue officer is assigned, when a lien has been filed or a wage levy will run for months, when the balance is large, or when the debt is business payroll tax, where the trust fund recovery penalty on the owners is the larger problem.

The monthly flat fee

Many matters like this one run as a monthly flat-fee engagement: one number, agreed up front, that covers agency contact, deadlines, document responses and strategy until the matter resolves. For a levy that means the release, the financial statement behind it, and the payment plan, hardship status or offer that follows, with billing paused while we wait on the IRS.

Documents to gather

The levy with its date, the notices before it, and three months of financial records are what the first call needs.

• The letter from the bank or the copy of the levy from payroll, with the date it was received.
• The LT11 or Letter 1058 and its envelope, if you have them.
• Three months of bank statements and pay stubs, business and personal.
• This month’s rent or mortgage, utilities, insurance, medical costs, child support and car payments.
• Proof of any payment plan, offer or hearing request that was pending when the levy issued.

How long does an IRS bank levy last?

It is a single event. The bank holds what was in the account when the levy arrived for 21 days under section 6332(c), then sends it to the IRS; later deposits are not touched.

How much of my paycheck can an IRS wage levy take?

Everything above the exempt amount in Publication 1494, with no percentage cap. If the dependents statement is not returned within three days, the employer uses the married filing separately figure with no dependents, the lowest one.

Does asking for a payment plan release a levy?

A pending request stops new levies under section 6331(k), and an approved agreement gets the existing levy released, so ask for the agreement and the Form 668-D in the same call, before the 21 days run.

Can I get money back after the bank sends it to the IRS?

Sometimes. Under section 6343(d) the IRS can return levied funds when the levy was premature or wrongful, when an installment agreement is in place, or when the return will help collection.

What if the money in the account was not mine?

The IRS levies any account the person who owes can draw on, including a joint account. The other owner files a wrongful levy claim, with proof of where the deposits came from, within two years.

Does a levy release mean the debt is gone?

No. A release under section 6343 ends the levy, not the liability. Interest keeps running until the balance is paid, settled, or reaches the end of the ten-year collection statute, and the IRS can levy again if the resolution falls apart.

Related pages

• IRS collections attorney, the parent page
• Tax levy attorney, the Final Notice and the 30-day hearing window
• IRS Notice CP14, the first bill
• IRS CP501 and CP503 reminder notices
• IRS Notice CP504, the earlier intent-to-levy letter
• IRS Final Notice of Intent to Levy, LT11 and Letter 1058
• When an IRS revenue officer is assigned
• Notice of Federal Tax Lien filed, Letter 3172
• Trust fund recovery penalty, Letter 1153
• IRS passport certification, CP508C
• IRS Form 433 financial statement