Office in Freehold NJ | 
What New Jersey taxpayers should know about old IRS levy notices, the 21-day hold, and getting help before the money is gone.
Imagine trying to buy groceries and having your debit card declined. You check your bank account. The money appears to be there, but you cannot use it. Your bank tells you the IRS has levied the account because of unpaid taxes.
If you owe back taxes, the IRS may take money from your bank account through a bank levy. The IRS generally must follow notice rules first, but the notices might have been sent months or even years ago. You may have options to challenge or release the levy, but timing matters.
At Tomes Law Firm, our New Jersey tax resolution team helps individuals and business owners understand IRS collection action, seek appropriate relief, and resolve the debt that caused the problem.
Can the IRS levy my account without sending a new warning?
Yes. The IRS generally must assess the tax, demand payment, and issue a final notice of intent to levy with an opportunity for a Collection Due Process hearing at least 30 days before its first levy for that tax liability. Other notice requirements and exceptions may apply.
Here is the part many taxpayers miss: once the IRS has properly provided the required final levy notice and hearing opportunity for a particular liability, it generally does not have to repeat that final notice before every later levy for the same liability.
Suppose the IRS issued the required final notice in 2024. Nothing happened, and you assumed the danger had passed. In 2026, the IRS may be able to levy your account without restarting the 30-day final-notice cycle. An old notice does not simply expire because the IRS waited two years to act.
This does not give the IRS unlimited collection power. Different tax liabilities, applicable collection suspensions, a pending protected appeal, an installment agreement, or other legal restrictions can change what the IRS may do. The exact notice history must be reviewed.
What happens when a bank receives an IRS levy?
The bank generally freezes money in the account when it receives the levy, up to the amount owed. A typical bank levy reaches funds in the account at that moment; later deposits are generally not captured by that same levy. But the IRS may issue another levy.
A frozen account can mean missed rent or mortgage payments, unpaid utilities, trouble buying groceries, or, for business owners, difficulty paying payroll and vendors.
Does the bank send the money to the IRS immediately?
Usually not. For most bank levies, the bank must hold the levied funds for 21 calendar days before sending them to the IRS. That window can give you time to seek a release, provide financial information, or correct an error. The bank generally needs authorization from the IRS to release the frozen money.
Do not confuse this 21-day bank holding period with an extension of the original deadline to request a Collection Due Process hearing. They are different rules.
Do not wait until the end of the 21 days to ask for help.
What happens when taxpayers come to us too late?
In my years helping taxpayers with IRS collection problems, I have seen too many people come to us after the damage has been done. The levy was issued, the 21-day period passed, and the bank already sent the money to the IRS.
By that point, the taxpayer may have missed a mortgage payment, fallen behind on business bills, or lost money needed for everyday living. The most frustrating cases involve people who received a final levy notice a year or two earlier, saw no immediate collection action, and thought they no longer had to worry.
That can be an expensive assumption. Once funds are sent to the IRS, there are circumstances in which a return of levied property or money may be possible, but strict rules and deadlines apply. Recovery is not guaranteed.
I would much rather have someone call our office when they receive the levy notice than after the bank has turned over their money.
Can the IRS take all the money in my account?
The IRS can generally levy bank funds up to the amount legally owed, including applicable penalties and interest. Unlike some wage levies, an ordinary bank levy does not leave a fixed general allowance for household expenses. Certain property or funds may be exempt, and ownership rights matter.
For an individual taxpayer, the IRS must release a levy if it determines the levy is creating an economic hardship by preventing payment of necessary, reasonable living expenses. You will usually need to document income, expenses, and the hardship.
How can an IRS bank levy be released?
Possible grounds include an economic hardship, payment of the liability, a levy issued in error, expiration of the collection period, or entry into an installment agreement that requires the levy to be released. A release may also be appropriate in other circumstances under federal law.
A release addresses the specific levy. It does not automatically erase the tax debt. Without a plan for the liability, another levy may follow.
What if it is a joint account or a business account?
Joint accounts can raise difficult ownership questions. A spouse or another joint owner may be able to show that money belongs to them rather than the person who owes the tax. Account titles alone do not settle every ownership issue; bank statements and deposit records may be important.
A business bank levy can stop payroll and interrupt operations. Whether a particular account can be levied depends on who owns the funds, whose tax is due, and the applicable rules. Business owners should get help promptly because a single levy can create several new problems.
What should I do immediately if my account is frozen?
- Call the bank. Ask when it received the levy, how much was frozen, and obtain a copy of the levy notice.
- Identify the tax periods and amounts. Have your representative review the IRS account and notice history.
- Gather proof of hardship or errors. Keep bank statements, income information, bills, and evidence showing who owns the funds.
- Contact the IRS or a tax resolution attorney promptly, ideally well before the 21-day period ends.
- Resolve the underlying debt. Consider an appropriate payment plan, Currently Not Collectible status, an Offer in Compromise, or another legally available option.
Frequently asked questions
Can the IRS levy my account after two years with no contact?
Yes, in many cases. If the required final levy notice and opportunity for a hearing were properly provided for that liability, the IRS generally need not issue the same final notice again simply because two years passed.
Does the 21-day holding period mean I have 21 days to appeal the old notice?
No. The 21-day bank hold and deadlines to request a Collection Due Process hearing are separate.
Can the IRS levy the same account again?
Yes. A typical bank levy captures funds on hand when served, but later levies are possible if the debt remains collectible.
What if I cannot afford rent or groceries after the levy?
Ask for immediate review of financial hardship and provide documentation. A release may be required when an individual cannot meet necessary, reasonable living expenses.
Can an attorney get my money back after the bank sends it?
Sometimes a return may be available under specific legal rules. It is more difficult and not guaranteed, so prompt action is critical.
The best time to act is before the levy
The best time to stop an IRS bank levy is before it happens. The next best opportunity may be during the 21-day bank holding period. After the money is turned over, options can become much more limited.
If you received an IRS final levy notice, even a long time ago, your bank has already frozen funds, contact the tax resolution attorneys and accountants at Tomes Law Firm for a confidential free consutlation to discuss your rights and available tax resolution options. Call us at 732-333-0681 or 833-4IRS-TAX
We Solve Tax Problems. You Get Peace of Mind.
This article is general information, not legal advice. The facts, tax periods, notice history, and applicable legal protections affect any individual case.
Official IRS resources
IRS: Information About Bank Levies