IRS Form 668-A: Your Guide to Tax Levies and Solutions

The Internal Revenue Service (IRS) has broad authority to collect unpaid taxes, and one of its most powerful enforcement tools is IRS Form 668-A. This legal document, a Notice of Levy, authorizes the IRS to seize personal property or funds in a bank account held by third parties to satisfy a tax debt. A bank levy does not require court approval. Many taxpayers become aware of the action only after their funds freeze, frequently due to a final notice they may have overlooked. Severe financial hardship can result from a garnishment, particularly when you need the money in your bank account for essential expenses.

This guide explains how the levy process works, what triggers Form 668-A, and how to respond. You’ll learn about key rights, exemptions, and strategies that can help you protect your account, wages, and assets. Whether you’re dealing with outstanding debt, facing collection from government agencies, or hoping to avoid economic hardship, understanding Form 668-A is crucial. 

Knowing your responsibilities and legal protections, you can take informed action before or during a levy. If you owe taxes or suspect a levy is imminent, this article offers the clarity you need to navigate your financial situation and avoid further disruption.

What Is IRS Form 668-A?

IRS Form 668-A, known as the Notice of Levy, is a legal document the IRS issues to seize property held by third parties to collect unpaid taxes. It allows the government to take money or personal property that belongs to the taxpayer but is held by others, such as a bank, employer, or business client.

This form is most commonly used to transfer funds into a bank account. Once received, the bank must freeze the account and hold the funds for a specific waiting period before sending them to the IRS. Only the funds in your bank at the time of the form's receipt are subject to the levy, not any future deposits. The IRS may also target business receivables, rental income, and other third-party-held assets.

Form 668-A differs from wage garnishment, which typically uses IRS Form 668-W. While 668-W applies to wages and salaries, Form 668-A is broader and can reach a wider range of assets.

This process does not require a court order or judgment creditor involvement. Once the IRS sends the form, the recipient must legally comply. In rare cases, failure to act can result in penalties for the third party.

Taxpayers who believe the levy is in error or are experiencing immediate economic hardship may request a release. The IRS must evaluate the financial situation and determine whether the levy should proceed.

Understanding how bank levies work and what triggers IRS Form 668-A is essential for anyone dealing with outstanding debt or IRS collection efforts. Early action—such as setting up a payment plan—can often prevent enforcement.

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The Legal Authority Behind Tax Levies

The Internal Revenue Service has the legal authority to seize property for unpaid taxes under the Internal Revenue Code (IRC). This authority allows the agency to issue IRS Form 668-A without court approval and initiate the levy process on assets held by third parties.

The IRS’s power to collect tax debt through bank levies and seizures is rooted in specific sections of federal law. These provisions specify when the IRS can take action, what kinds of property it can seize, and what rights taxpayers have in specific circumstances.

Key Legal Provisions That Authorize IRS Levies:

1. IRC Section 6331: Authority to Levy
   After issuing and ignoring a final notice, the IRS may seize wages, bank accounts, personal property, and other assets to collect unpaid debt.
   
   
2. IRC Section 6332: Obligation of Third Parties
   Third parties, such as banks or employers, are legally required to comply with the levy and surrender funds or property they hold on behalf of the taxpayer.
   
   
3. IRC Section 6333: Books and Records
   Upon request, third parties must produce records to identify the taxpayer’s assets or verify amounts owed.
   
   
4. IRC Section 6334: Property Exempt from Levy
   Certain types of income and property, such as a portion of wages, Social Security Benefits, and child support payments, are exempt from taxation under the law.
   
   
5. IRC Section 6343: Release of Levy
   The IRS must release a levy if it was issued in error, the debt is fully paid, or if it causes immediate economic hardship.

These statutes establish the limits of the levy process and guarantee the legal enforcement of both collection and taxpayer protection measures.

How Bank Levies Work

A bank levy is a legal action that allows the IRS to collect unpaid taxes by seizing funds from a taxpayer’s bank account. This process is initiated through IRS Form 668-A, known as a Notice of Levy, which authorizes the IRS to freeze and withdraw money held by a third-party financial institution.

Once a levy is issued, the bank receiving the form is legally required to take action. Taxpayers often learn of the levy only after their accounts have been frozen, making it essential to understand the steps involved and how to respond quickly.

How the Bank Levy Process Works:

1. Form 668-A Is Sent to the Bank.
   The IRS identifies the taxpayer’s account and sends Form 668-A to the bank holding the funds. The notice directs the bank to freeze the funds immediately upon receipt.
   
   
2. Immediate Freeze of Funds in the Account.
   The bank must freeze the money available when the levy is received. Funds deposited after that point are not subject to the freeze. The freeze may apply to the full balance or the minimum amount needed to cover the unpaid debt.
   
   
3. The 21-day waiting period begins.
   Under the Internal Revenue Code, there is a mandatory 21-day waiting period before the bank can transfer the funds to the IRS. This gives the taxpayer time to take action, such as contacting the IRS, requesting a release, or correcting errors.
   
   
4. Taxpayer Notification.
   After the levy is issued, the IRS typically sends a copy of Form 8519 to the taxpayer as official notice. Sometimes, this is the first time the taxpayer learns about the levy.
   
   
5. Resolution Options During the Waiting Period.
   Taxpayers may take several steps before the 21 days expire:
   
   
   
   • They may pay the tax debt in full.
     
     
   • They may request a levy release due to financial hardship.
     
     
   • To settle the outstanding debt, they might set up a payment plan.
     
     
   • The findings may indicate that the levy is causing immediate economic hardship.
     
     
   • They may demonstrate that all funds, such as Social Security benefits, are exempt.
     
     
6. Transfer of Funds to the IRS.
   If the bank does nothing, it must send the frozen funds to the IRS after the waiting period. This satisfies all or part of the tax liability.
   
   
7. Legal Protection for the Bank.
   Once the bank complies with the levy instructions, it is no longer liable to the taxpayer for the funds taken. Creditors typically have no authority to interfere with the IRS levy process if it follows legal procedures.

IRS bank levies do not require a court order. The process is governed by federal law, and government agencies are authorized to act without involving a judgment creditor or obtaining court approval. For taxpayers with unpaid taxes, responding quickly may prevent further disruption and protect essential property, wages, and income.

Property and Funds the IRS Can Seize

The IRS can seize various property and financial assets to collect unpaid taxes. Through IRS Form 668-A, the agency can levy items held by third parties—such as banks or businesses—without a court order. Understanding what the IRS may target helps taxpayers respond before the levy process takes full effect.

Common Property and Funds Subject to Levy

• Bank accounts
  Depending on the state's laws and regulations, the IRS can freeze and seize funds in the account immediately upon receipt. This structure includes a joint-structure partnership.
  
  
• Business receivables
  Payments owed to the taxpayer by clients or vendors may be redirected to the IRS to cover tax debt.
  
  
• Investment accounts
  Non-retirement assets like stocks, mutual funds, or certificates of deposit are subject to levy unless exempt by law.
  
  
• Wages and salaries
  While generally levied under Form 668-W, income from employment may also be subject to seizure if not already protected.
  
  
• Personal property
  Certain situations may lead to the seizure of items like vehicles, rental income, and valuable personal assets.
  
  
• Federal payments
  Government disbursements, including federal contract payments or tax refunds, can be intercepted unless exempt.
  
  
• Proceeds from personal loans
  If loan funds are disbursed directly to the taxpayer, they may be seized, depending on the timing and financial control involved.

Not all types of property can be levied. Exemptions exist for basic living expenses, Social Security benefits, child support, and other essential income sources. If taxpayers believe they are targeting protected property, they should evaluate their financial situation and request a review.

What Triggers a Form 668-A Levy

An IRS Form 668-A levy is not issued without warning. It typically follows a series of steps involving unpaid tax debt and failed opportunities to resolve it. The IRS must notify the taxpayer and offer resolution options before seizing a bank account or personal property.

Key Triggers for Levy Action

1. Outstanding Tax Debt
   The agency may initiate the levy process when a taxpayer owes back taxes and does not respond to multiple IRS notices.
   
   
2. Final Notice of Intent to Levy Ignored
   Before acting, the IRS sends a Final Notice and offers a chance to request a Collection Due Process hearing. If the taxpayer does not file an appeal, the levy may proceed.
   
   
3. Failure to Communicate or Set Up a Payment Plan
   Ignoring correspondence or refusing to work out a resolution—such as an installment agreement—signals noncompliance.
   
   
4. No Court Approval Required
   The IRS does not need court approval to issue Form 668-A. Unlike a money judgment from a judgment creditor, IRS levies are administrative actions under federal law.
   
   
5. Lien Has Been Filed or Ignored
   In many cases, a federal tax lien precedes the levy. If the lien does not prompt payment, enforcement continues.
   
   
6. No Active Bankruptcy Case
   The IRS can legally issue a levy if bankruptcy does not protect the taxpayer.

IRS enforcement can escalate quickly if ignored. Understanding these triggers helps taxpayers avoid unnecessary levies by filing missing returns, requesting relief, or communicating with the IRS early in the process.

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Resolving a Tax Levy

An IRS tax levy can significantly affect your financial stability by freezing your bank account or seizing property. However, if you act quickly and understand your rights, the IRS provides several pathways for resolving a levy. Whether your tax debt is partially paid, disputed, or caused by identity theft, options are available.

Steps to Resolve a Tax Levy

1. Pay the Debt in Full
   If your balance is fully paid, the IRS is legally required to release the levy. This method is the fastest and most direct way to resolve the issue, although it may not be financially feasible for all taxpayers.
   
   
2. Set Up a Payment Plan
   Taxpayers who cannot pay in full may request an installment agreement. A payment plan allows you to make monthly payments toward the outstanding debt while preventing further enforcement.
   
   
3. Demonstrate Financial Hardship
   If the levy creates immediate economic hardship—such as the inability to pay for housing, food, or medical care—you may request a levy release. The IRS considers your income and essential expenses using its Collection Financial Standards.
   
   
4. Submit an Offer in Compromise
   You may qualify to settle your tax debt for less than the full amount owed. This option requires proving that you cannot reasonably pay the full balance due to limited income, assets, or overall financial situation.
   
   
5. File for Identity Theft Protection or Innocent Spouse Relief
   You may file a claim with the IRS if a spouse is solely responsible for identity theft or tax debt. These claims can result in reversing enforcement and protecting your funds.
   
   
6. Dispute the Levy or File an Appeal
   You can file a Collection Due Process appeal if the levy was issued incorrectly or without proper notice. This allows a review of your case and may halt the levy temporarily or permanently.

Resolving a levy requires swift action. Whether you pay, appeal, or file for relief, the sooner you respond, the more likely you are to protect your property and avoid further disruption.

Alternative to Bank Levies: Wage Garnishment

While bank levies target funds already in a taxpayer’s bank account, the IRS may also use wage garnishment to collect unpaid tax debt. This method involves directing an employer to withhold a portion of an employee’s wages and sending those payments directly to the IRS until the debt is resolved.

Wage garnishment is typically executed using IRS Form 668-W, a Notice of Levy on Wages, Salary, and Other Income. Wage garnishment is continuous and impacts future earnings, unlike a bank levy, which only affects the money available during the levy.

Key Facts About Wage Garnishment:

• Notice and Withholding
  The IRS sends the garnishment notice directly to the employer. Once received, the employer must legally withhold a portion of the employee’s income.
  
  
• Limits on Withholding
  The IRS does not necessarily take all wages. A portion of income is exempt, based on filing status and number of dependents. However, the amount withheld can still be significant.
  
  
• Duration of Garnishment
  Wage garnishment continues until the tax debt is fully paid, the taxpayer sets up an approved resolution, or the IRS releases the levy.
  
  
• Financial Hardship Claims
  Taxpayers experiencing financial hardship may request a release or adjustment. Documentation showing essential living expenses and limited income is typically required.
  
  
• Employer Obligations
  Employers must comply promptly. Failure to withhold the required payment makes the employer liable for the unpaid taxes.

Wage garnishment is a powerful collection tool. Responding early—either by requesting a payment plan or proving hardship—can stop or reduce the impact of garnishment on future income.

Financial Institution Responsibilities

When the IRS issues Form 668-A, financial institutions are critical in executing the levy process. A bank or credit union receiving the notice must follow specific procedures to freeze and transfer the taxpayer’s funds in compliance with federal law.

Failure to act correctly may expose the financial institution to liability or penalties. As part of its role, the institution must coordinate with the IRS and the account holder while maintaining full legal compliance.

Required Actions for Financial Institutions

• Immediate Account Freeze
  Upon receiving the levy notice, the bank must immediately freeze the funds in the account based on the date and time of receipt. Any money deposited after the levy date is not subject to seizure under that specific notice.
  
  
• Hold Period and Compliance Timeline
  The IRS requires a mandatory 21-day waiting period before the bank can remit the funds. The taxpayer may contact the IRS, arrange a resolution, or dispute the levy during this period. The bank must retain the frozen funds throughout this period.
  
  
• Transfer of Funds to the IRS
  If no release or resolution is provided within 21 days, the bank must send the levied amount directly to the IRS. This payment satisfies part or all of the taxpayer’s outstanding debt.
  
  
• Recordkeeping and Reporting
  Banks must keep detailed records of the levy process, including account balances, communication with the IRS, and payments made. Proper documentation helps avoid compliance issues and supports any future audits.
  
  
• Use of Electronic Systems
  Many government agencies now transmit levy notices through secure fax or electronic systems. Banks are expected to process these levies promptly and in accordance with federal guidelines.

Financial institutions serve as a key enforcement arm in the IRS collection process. Their timely and accurate actions are essential to lawful tax recovery efforts.

Common Misconceptions About IRS Levies

Many taxpayers misunderstand how IRS levies work, leading to delayed responses or serious financial consequences. Below are several widespread misconceptions clarified with accurate information.

“The IRS needs a court order to take my money.”

The IRS does not need a court order to issue a levy. Unlike other creditors, government agencies have administrative authority under the Internal Revenue Code to seize funds or property without judicial approval.

“My joint bank account is safe from a levy.”

If you share a bank account with someone else, the IRS may still seize funds. Ownership rules vary by state, but if the taxpayer has a legal interest in the account, it is not automatically protected.

“Wages can’t be garnished without a lawsuit.”

The IRS does not need to sue before garnishing wages. The IRS can instruct your employer to withhold a portion of your wages through a wage garnishment order once they have sent proper notice.

"The IRS has the power to seize everything I possess."

Certain types of personal property and income are exempt from levy. Depending on the circumstances, the IRS may protect a portion of your wages, Social Security benefits, and work-related tools.

"Levies often occur without prior warning."

The IRS is legally required to provide a final notice and an opportunity to resolve the tax debt before issuing a levy. Ignoring that notice can result in enforcement, but it does not occur without prior communication.

Understanding the facts behind these misconceptions can help taxpayers act quickly, protect assets, and resolve tax issues more effectively.

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Frequently Asked Questions

Get answers to common IRS levy questions, including how to stop a levy, what property is eligible for exemption, and when to seek help. This section was last reviewed or updated. See the page's last review details above.

What happens when the IRS sends Form 668-A to my bank for a tax debt?

When the IRS sends Form 668-A, the bank must immediately freeze funds in the account. Only funds present at the levy's receipt are subject to the freeze. After a 21-day holding period, the bank sends the funds to the IRS unless the taxpayer resolves the tax debt or qualifies for a release. This action does not require a court order and is authorized under federal law.

Can the IRS levy a joint bank account held with personal property?

The IRS can levy a joint bank account if the taxpayer has a legal ownership interest. State law allows the IRS to seize some funds, even if another party deposits them. However, the non-liable account holder can request a refund by proving ownership. Personal property within the account is also subject to evaluation and potential seizure depending on its legal status.

How can I stop a bank levy after government agencies issue it?

To stop a bank levy, you can pay the full amount, request a payment plan, or show financial hardship. Government agencies like the IRS allow you to request a levy release if the seizure causes immediate economic hardship. You may also file an appeal or dispute the levy if you did not receive proper notice. Prompt action is essential to prevent the transfer of funds.

What rights do I have before the IRS levies my property as a judgment creditor?

Before levying your bank account or property, the IRS must issue a Final Notice of Intent to Levy and provide an opportunity for a Collection Due Process hearing. Unlike a private judgment creditor, the IRS does not need court approval. However, it must follow legal procedures and allow you to appeal, resolve the debt, or request relief before proceeding.

How long does the IRS wait to take my funds after I receive a money judgment notice?

After sending Form 668-A, the IRS provides a 21-day waiting period before taking funds from your account. This time allows you to contact the IRS, propose a resolution, or dispute the money judgment if applicable. If you take no action, the IRS automatically receives the funds. This procedure ensures due process without the need for court involvement.

What if the IRS makes a mistake on the levy, and the tax is fully paid?

If the levy was issued in error—such as after your tax debt was fully paid—you can contact the IRS immediately to request a release. You may also file a Collection Appeal Request. If funds were wrongfully seized, you could be entitled to a refund. Keep records showing payments, communication, and notices to support your claim.

Should I hire a tax professional to help with IRS Form 668-A and court approval issues?

Yes, hiring a tax professional is strongly recommended. A qualified representative can review whether court approval was required, assess your tax liability, identify exempt property, and file necessary appeals. They can also negotiate payment plans or offers in compromise, helping to protect your rights and ensure that the IRS follows proper procedures. A professional can also evaluate whether the levy exceeds the maximum amount legally allowed.

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