How to Release an IRS Levy on Your Assets

By Sofia Rossi5 min read 129 views

What an IRS Levy Means and Why It Happens

An IRS levy is a legal action that allows the agency to seize property or rights to property to satisfy a tax debt. Unlike a lien, which is a claim against your assets, a levy actually takes them. The IRS commonly levies bank accounts, wages, Social Security benefits, rental income, and even the cash value of life insurance policies. A levy typically follows years of unresolved notices, and the IRS must issue a Final Notice of Intent to Levy and Notice of Your Right to a Hearing at least 30 days before levying.

Table of Contents

What an IRS Levy Means and Why It Happens
Immediate Grounds the IRS Will Release a Levy
Economic Hardship as a Release Reason
Steps to Request a Release of IRS Levy
Working Directly with the IRS
Bank Levies vs. Wage Levies: What Gets Released
How an Installment Agreement Stops a Levy
Can a Tax Professional Help Get a Levy Released?
What Happens If the Levy Is Not Released
Preventing Future IRS Levies

Immediate Grounds the IRS Will Release a Levy

The IRS is required to release a levy under specific, defined circumstances. If any of the following apply, the agency must lift the levy:

The tax debt is fully paid.
The levy amount exceeds what is legally collectible from your income and assets.
The release of the levy will help you pay your taxes.
An installment agreement is in place and the terms do not allow the levy to continue.
The IRS determines that the levy creates an economic hardship, meaning you cannot pay for basic living expenses such as food, rent, and medical care.
The property levied is exempt, such as certain unemployment benefits or tools of your trade up to a statutory limit.
The Collection Statute Expiration Date has passed, meaning the IRS can no longer legally collect the debt.

Economic Hardship as a Release Reason

Economic hardship is one of the most common reasons taxpayers seek a levy release. The IRS will consider whether the levy prevents you from paying for necessities. However, hardship alone does not erase the debt; it only pauses the immediate seizure. You must still resolve the underlying tax liability through payment, an installment agreement, or an offer in compromise.

Steps to Request a Release of IRS Levy

If you believe a levy is causing hardship or is otherwise improper, you can take direct action. The process is administrative, not judicial, and requires careful documentation.

Review the levy notice to confirm the amount, the date, and the property seized.

Gather financial records, including bank statements, pay stubs, rent or mortgage statements, and proof of essential expenses.

Contact the IRS employee or institution named on the levy notice — for bank levies, this is the financial institution; for wage levies, it is your employer.

File Form 12153, Request for a Collection Due Process or Equivalent Hearing, within 30 days of the Final Notice to trigger an independent review.

Submit supporting documentation that demonstrates hardship or that the levy exceeds what is collectible.

Working Directly with the IRS

You can also call the IRS directly using the number on the levy notice to negotiate a release. An IRS revenue officer has discretion to temporarily release a levy while you work out a payment arrangement. Getting this in writing is critical, as verbal promises do not bind the agency.

Bank Levies vs. Wage Levies: What Gets Released

The mechanics of release differ depending on what is levied. A bank levy is typically a one-time freeze on funds in the account, and the bank must hold those funds for 21 days before remitting them to the IRS. A wage levy is ongoing and continues until the debt is satisfied, the levy is released, or the taxpayer reaches an agreement.

Levy Type	How It Works	Release Path
Bank Account	Funds frozen for 21 days, then seized	Request release before the 21-day window ends or file a Collection Due Process hearing
Wage Garnishment	Ongoing deduction from each paycheck	Installment agreement, hardship claim, or settlement offer
Social Security	Up to 15% of benefits can be levied	Same as wage levy, but exempt amount is protected
1099 or Self-Employment Income	Levy sent to payer or bank	Release the levy on the specific payment source

How an Installment Agreement Stops a Levy

Entering into a current-installment agreement is one of the most reliable ways to secure a levy release. The agreement must be current, meaning you are up to date with all filing and payment obligations. Once the IRS receives a completed Form 9465 and all required documentation, it generally releases the levy on wages and bank accounts within 30 days, though it may take longer if the debt is large.

Can a Tax Professional Help Get a Levy Released?

Yes. Enrolled agents, certified public accountants, and tax attorneys routinely handle levy releases. They can file Form 12153, negotiate with the IRS revenue officer, and present hardship arguments that align with the agency's internal procedures. Professional representation does not guarantee release, but it ensures deadlines are met and documentation is complete.

What Happens If the Levy Is Not Released

If the IRS denies your release request, you have the right to appeal to the Office of Appeals. You can also request a Collection Due Process hearing, which triggers an impartial review by an independent appeals officer. In rare cases, a levy may be challenged in tax court if the IRS exceeds its legal authority, though this is an extraordinary step reserved for significant errors.

Preventing Future IRS Levies

Once a levy is released, preventing recurrence depends on staying current. File all required tax returns, respond to every IRS notice, and maintain any installment agreement or offer in compromise terms. Ignoring follow-up notices is the fastest way to trigger another levy, even after a prior release.