Getting Money Back After an IRS Levy

Release vs return: two different remedies

The tax code treats stopping a levy and refunding it as two separate requests, and you may need both. A release tells the bank, employer or other holder to stop. A return is the IRS sending back money it has already received.

The practical lesson: a release is far easier to get than a return. For a bank levy, the bank holds the frozen funds for 21 days before sending them (IRC 6332(c)). If the IRS releases the levy inside that window, the money never leaves your account and there is nothing to get back. See what to do in the 21-day window.

When the IRS must release a levy

IRC 6343(a)(1) says the IRS shall release a levy and promptly notify the person who was served when it determines that:

• the balance is paid, or the collection period ran out before the levy (see the 10 years (IRS.gov, 2026) collection statute);
• releasing the levy will help the IRS collect the tax;
• you entered an installment agreement, unless the agreement says the levy continues;
• the levy is creating an economic hardship, meaning it prevents you from meeting basic, reasonable living expenses; or
• the property is worth more than you owe, and releasing part of it will not hinder collection.

Publication 594 adds that the IRS will also release a levy that was issued improperly, for example:

• against property that is exempt from levy;
• prematurely, or before the IRS sent the required notice;
• while you were in bankruptcy and the automatic stay was in effect;
• when the costs of seizing and selling the property would be more than its fair market value;
• while a payment plan request, innocent spouse request or offer in compromise was being considered, or had been accepted and was in effect; or
• while Appeals or the Tax Court was considering a Collection Due Process case (with exceptions for some levies, such as a state refund levy or a jeopardy levy), or an appeal of a denied innocent spouse request.

For hardship, expect the IRS to ask for financial information, often a collection information statement such as Form 433-F. The IRS manual says it may release only as much as needed to prevent the hardship, so a partial release is possible. If your situation means you cannot pay anything, ask about currently not collectible status at the same time; IRC 6343(e) requires the IRS to release a wage levy as soon as practicable once it agrees the balance is not collectible.

The IRS uses Form 668-D, Release of Levy/Release of Property from Levy, to tell the bank or employer. Ask the IRS employee to confirm when the release was sent, and check with the holder that it arrived.

When the IRS will give money back

Once the money reaches the IRS, a release no longer helps. You need a return under IRC 6343(d). The statute lets the IRS return levied property, or an equal amount of money, if it determines that:

• the levy was premature or otherwise not in line with IRS administrative procedures;
• you entered an installment agreement for the liability, unless the agreement says otherwise;
• returning it will help collect the tax; or
• with your consent or the National Taxpayer Advocate’s, returning it is in the best interests of you and the United States.

Most of these are judgment calls. The IRS manual (IRM 5.11.2.4.1) treats a return as discretionary for premature or procedurally flawed levies, and says proceeds must be returned when the levy violated the law, unless the taxpayer gives written permission to keep them. A levy that caused an economic hardship is a factor the IRS weighs, not an automatic refund.

The 2-year window

Money, or the proceeds from selling seized property, can be returned only if you ask before 2 years from the date of the levy (IRC 6343(b), applied to 6343(d) returns). The IRS’s own example: a levy dated March 28, 2017 required a request by March 27, 2019. The IRS manual says the request must be in writing; the IRS may look into an oral request, but should tell you to put it in writing within the deadline. Property that has not been sold can be returned at any time.

Interest

When the IRS returns your own money under 6343(d), it pays no interest, except for certain levies on individual retirement plans (IRC 6343(f)). Interest at the overpayment rate applies to wrongful levies on third parties (IRC 6343(c)). If you are worried about a retirement account, see IRS levies on 401(k)s and IRAs.

Example (assumed figures)

A bank levy freezes $6,200. On day 18 of the 21-day hold, you set up a payment plan whose terms do not continue the levy. The IRS must release it, and the $6,200 stays in your account. Had you waited until day 30, the bank would already have sent the money, and you would need a written return request, which the IRS may grant because you entered an installment agreement, but is not required to.

How to ask for levied money back

1. Find the levy details. Get the date of the levy and the form used, from the levy notice copy you or the bank received (for example Form 668-A for a bank or Form 668-W for wages), and the IRS office or employee who issued it. Your IRS Online Account shows your balance by year, payments and digital notices.
2. Call first, the same week. Call the number on the levy notice, or your revenue officer if one is assigned, or the IRS at 800-829-1040 (IRS.gov, 2026) (businesses 800-829-4933 (IRS.gov, 2026)). If the money has not left the bank or employer yet, ask for a release instead; it is faster.
3. Put the request in writing. State that you request return of levied proceeds under IRC 6343(d), the levy date, the amount, the tax periods, and which ground applies (premature levy, procedures not followed, installment agreement, or best interests). Attach proof: the payment plan confirmation, the levy copy, bank statements, and a financial statement if you rely on hardship. Send it to the office that issued the levy, keep a copy and proof of mailing, and do it well inside the 2-year window.
4. Fix what caused the levy. A return request is stronger when you are back in good standing: missing returns filed and a payment plan or other resolution in place. See IRS payment plans compared.
5. Appeal a denial. If the IRS refuses, ask for a conference with the manager, then request the Collection Appeals Program (CAP), preferably on Form 9423 (details below).

If the balance itself is wrong, that is a separate fight; see how to dispute an IRS balance.

If the IRS took someone else's money: wrongful levy claims

A wrongful levy claim under IRC 6343(b) is for a person who does not owe the tax, for example a parent whose savings sat in an account where an adult child is only a signer, or a co-owner whose own money was in a joint account. Publication 4528 (Rev. 3-2018) sets out the process.

• Who can file: anyone other than the person who owes the tax, who believes the property is theirs or that they have a superior claim to it.
• Deadline: any time while seized property is unsold; otherwise before 2 years from the date the notice of seizure (Form 2433) was given or the notice of levy was delivered.
• Where: a letter to the IRS Advisory Group for the area where the levy was made; addresses are in Publication 4235 (the office marked “Other”).
• What to include: your name and address; a detailed description of the property; why it is yours; the name and address of the person who owes the tax; the IRS office that issued the levy; the levy date shown on the notice; why any of that is missing; and supporting documents, such as statements showing whose deposits funded the account.
• If rejected: appeal through CAP (Publication 1660), or sue in U.S. district court under IRC 7426. The court deadline is also 2 years, extended when you file an administrative claim in time (by the shorter of 12 months from your claim or 6 months from a mailed disallowance). Publication 4528 notes that damages under 7426(h) require filing the administrative claim first.

Getting bank fees back: Form 8546

Banks charge a fee to process a levy, and a frozen account can trigger overdraft charges. If the levy was the IRS’s mistake, Form 8546, Claim for Reimbursement of Bank Charges (Rev. 11-2024), lets you claim them. It does not refund the levied money itself.

• Who qualifies: the IRS must acknowledge the levy was erroneous; you must not have contributed to continuing or compounding the error; and before the levy you must not have refused to respond to IRS inquiries or provide information.
• What counts: the bank’s customary levy-processing charge and overdraft charges that directly resulted from the erroneous levy, which you paid and the bank did not waive or refund.
• Limits: claims must be made within one year of the date the claim accrues and are capped at $1,000 (IRS.gov, 2026) under 31 U.S.C. 3723.
• How: send it to the IRS office that served the levy (the address is on your copy of the levy), with the levy copy, bank statements showing the charges, proof you paid them, and any IRS letter acknowledging the error. Every owner of a joint account must sign.

Separately, Publication 594 says that if the IRS intentionally or negligently failed to follow the tax law while collecting, you may be able to claim economic damages in writing from the Advisory Group Manager for your area (Publication 4235).

Appeals and free help if the IRS says no

Collection Appeals Program (CAP). Publication 1660 says you can use CAP before or after a levy, and after levy proceeds reach the IRS you can appeal a denial of your request to return them. If a revenue officer handles your case, first ask for a conference with the Collection manager; tell them within 2 business days after that conference that you want to appeal, and get Form 9423 postmarked within 3 business days of it. CAP is fast, but its decision is binding: you cannot take it to court.

Collection Due Process (CDP). If you received an LT11 or Letter 1058 and the 30 days (IRS.gov, 2026) window is still open, a timely Form 12153 gives you an Appeals hearing that can consider a payment plan, an offer or hardship, with Tax Court review. For a levy made without a prior hearing notice, such as a state refund or jeopardy levy, IRC 6330(f) gives a hearing within a reasonable time after the levy. Our CDP hearing explainer and final notice action plan cover the steps.

Taxpayer Advocate Service. If the IRS is not responding and the levy is causing a hardship, the free Taxpayer Advocate Service (877-777-4778 (IRS.gov, 2026)) can help through Form 911 (Rev. 6-2026 (IRS.gov, 6-2026)).

Low Income Taxpayer Clinics. LITCs represent eligible taxpayers in collection disputes for free or a small fee.

Doing it yourself, and when a professional helps

A simple release, such as a payment plan set up online and a call to the number on the levy, is often something you can do yourself. A return request or wrongful levy claim is more technical: you need the right legal ground, the right office, supporting documents and a firm grip on the 2-year deadline.

Consider a representative when the levy has already taken a large amount, you need several years or entities sorted out, a revenue officer is involved, the IRS has denied a request, or the money belonged to someone else. Global Gate Tax Relief offers a free, no-obligation consultation. If it takes the case, it files Form 2848, pulls your IRS transcripts and quotes a flat fee upfront; in urgent levy cases it can often act within 24 to 72 hours of engagement, though release timing depends on the IRS. It does not promise outcomes and will tell you if you can handle it yourself. Start a free case review or call 1-877-800-8180.

For other ways to stop collection while you sort this out, see how to pause IRS collection and ways to stop an IRS levy.

Frequently asked questions

Keep reading in the Tax Liability Guide

• Levy release request letterTemplate to ask the IRS to release a levy
• Bank account frozen? The 21-day windowWhat to do before the bank sends your money to the IRS.
• Final notice action planThe 30-day plan after an LT11 or Letter 1058.
• How to pause IRS collectionEvery legal way to put collection on hold.
• IRS payment plans comparedThe plan that can trigger a levy release.
• Currently not collectible statusHardship status when you cannot pay anything now.