IRS Bank Levy in Dallas: What Happens and How to Stop It

An IRS bank levy is one of the most jarring collection actions a taxpayer can experience. You wake up one morning, try to use your debit card, and it is declined. You check your bank account and find it frozen — or worse, the balance is zero. This happens to Dallas taxpayers every day, and the shock is compounded by the fact that most people do not realize it was coming.

The 21-Day Hold

When the IRS serves a levy on your bank, the bank is required to freeze the funds in your account up to the amount of the levy. The bank then holds those funds for 21 days before sending them to the IRS. This 21-day period is your window to act. If you can get a levy release during those 21 days, the bank will return the funds to your account instead of sending them to the IRS.

What Gets Levied

The levy attaches to the balance in your account at the moment the levy is served. Deposits that come in after the levy is served are not subject to that levy — though if the IRS serves another levy (they can do this repeatedly), future deposits are swept as well. This is why ongoing wage levies are typically more damaging than a one-time bank levy.

How to Get a Release

The fastest path to a release is to enter into an installment agreement or submit a hardship claim. If you can demonstrate that the levy is creating a severe hardship — preventing you from paying for basic necessities — the IRS can release the levy on that basis alone. Filing an Offer in Compromise or requesting a Collection Due Process hearing can also trigger a release or a hold on collection activity.

What the IRS Cannot Take

Certain funds are exempt from IRS levy even when in a bank account. These include amounts deposited in the two months before the levy for specific federal benefit payments (Social Security, veterans' benefits, SSI). Banks are required to identify these protected amounts automatically. If your bank account contains these protected deposits and the bank levied them anyway, contact our office immediately.

If you have just been hit with an IRS bank levy, call us today. The 21-day window is not long, and every day matters. We have successfully obtained levy releases for Dallas-area taxpayers in emergency situations.

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