What do I do if the IRS freezes my bank account?

If the IRS freezes your bank account, there will be a 21-day period during which neither you nor the IRS can access your money. During those 21 days, you must reach an arrangement to pay your debt with the IRS, or your bank will be required to turn over enough to cover what you owe. When the IRS freezes your account, your bank can send everything to the IRS if you owe more than you have in the bank. If you need more legal help, use the free tool below.

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Oct 11, 2021

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If you owe money to the IRS and have been unable to successfully dispute your IRS tax collection, there’s not a lot you can do to stop the IRS from getting what’s owed.

Negotiating a Payment Plan with the IRS

The IRS will attempt to negotiate a payment plan before they attempt to seize property. This is because the IRS wants what’s owed with the least amount of effort. This means that they’ll try to get you to pay willingly first. If that fails, they will attempt to seize money before other property. After all, selling property requires extra steps to get the money owed.

The IRS cannot freeze and seize monies in your bank account without proper notice. This is another tactic by the IRS to get your attention. Once your bank receives a notice of seizure of your funds, your bank has an obligation to hold the money for at least 21 days before paying it over to the IRS. You must contact the IRS immediately to negotiate either a partial or a full release of your funds.

If you don’t reach an agreement with the IRS after your funds are held and before the twenty-one days are up, the bank will send the money up to the amount owed.

If you need to negotiate with the IRS to settle a debt before your accounts are frozen, you can find a tax attorney near you with our FREE search tool.

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When is the IRS Required to Release My Bank Account?

Under federal law, the IRS must release your bank account if:

  • You pay the tax, penalty, and interest you owe.
  • You discover that the time for collection (the statute of limitations) ended before the levy was served.
  • You provide documentation proving that releasing the levy will help them collect the tax.
  • You have an installment agreement or enter into one unless the agreement says the levy does not have to be released.
  • You determine that the levy is creating a significant economic hardship for you.
  • The fair market value of the property exceeds such liability and release of the levy on a part of such property could be made without hindering the collection of such liability.

The IRS may consider releasing your funds and in turn, send the money, when:

  • They levy before they send you the two required notices, or before your time for responding to them has passed (10 days for the Notice and Demand, 30 days for the Notice of Intent to Levy, and the Notice of Right to a Hearing).
  • They did not follow their own procedures.
  • They agree to let you pay in installments, but they still levy, and the agreement does not say that they can do so.
  • Returning the property will help you pay your taxes.
  • Returning the property is in your best interest and the government’s best interest.

Getting Help

If the IRS has frozen your bank account and is threatening to seize the monies in your account, it is in your best interest to consult a tax attorney. You can find a tax attorney near you by entering your ZIP code into our search tool now. 


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