IRS Bank Levy Checklist for Business Owners Checklist

• You own a sole proprietorship, partnership, S-corp, or C-corp with personal tax debt
• Your personal bank account holds or receives business revenue
• You received IRS notices CP504, LT11, or Letter 1058 (Final Notice of Intent to Levy)
• You are behind on individual income tax, self-employment tax, or trust fund recovery

penalties

• You have not yet had a levy placed, but anticipate one

This checklist does NOT apply if

• Your only tax issue is corporate payroll tax debt under separate business procedures
• You filed for bankruptcy, and the automatic stay is in effect
• You are a W-2 employee facing only wage garnishment
• Your debt is in an active payment plan, and you are making the required payments.

Decision Framework

The IRS focuses on seizing liquid funds before you can move them. What you do within the

30-day CDP notice period and the 21-day bank holding period determines whether you maintain operations or lose cash flow. The IRS locates accounts through third-party matches, including employer records, prior tax returns, and 1099 forms. Most business owners miss the narrow response windows or fail to document that levied funds serve essential business purposes, such

as payroll. Proving funds belong to employees or are critical to business survival can halt or partially release a levy.

Step-by-Step Checklist

1. Step 1: Identify the Notice You Received

   Locate your IRS notice and verify which type you received. The Final Notice will be CP504,

   LT11, or Letter 1058 titled “Final Notice of Intent to Levy and Notice of Your Right to a Hearing.”

   This is your CDP notice, not the actual levy.

2. Step 2: Note the Critical Deadlines

   Check the notice date on your CDP notice. You have 30 days from the date of this notice (the period begins the day after the notice date) to request a Collection Due Process hearing. Your request must be postmarked within this 30-day window.

3. Step 3: Determine if a Levy Has Already Been Executed

   Log in to your bank account immediately and check for frozen funds. If a levy has been executed, your bank has received Form 668-A (Notice of Levy for Bank Accounts) or Form

   668-W (Notice of Levy on Wages). Document the freeze date and current balance.

4. Step 4: Contact Your Bank During the Holding Period

   If your account is frozen, the bank must hold the funds for 21 calendar days before surrendering them to the IRS. Call your bank to confirm which account is affected and obtain written confirmation of the levy amount and the date funds will be surrendered.

5. Step 5: Request a CDP Hearing Before the Deadline

   If you have not yet missed the 30-day deadline from your CDP notice, complete Form 12153

   (Request for a Collection Due Process or Equivalent Hearing) immediately. Mail it via certified mail to the address shown on your CDP notice. This hearing request suspends the levy action.

6. Step 6: Document Your Financial Condition

   Complete Form 433-A (Collection Information Statement for Wage Earners and Self-Employed

   Individuals) showing your current income, expenses, assets, and debts. Include bank statements from the past two months, highlighting payroll deposits and essential business payments to demonstrate the account’s operational necessity.

7. Step 7: Separate Personal and Business Funds

   Create a detailed breakdown showing which funds in the levied account serve business purposes versus personal use. Calculate the average daily balance allocated to employee

   payroll within the last 30 days. The IRS may release funds directly attributable to wages owed to employees.

8. Step 8: Draft a Hardship Statement

   Write a brief explanation documenting how the levy prevents you from meeting basic business operations and reasonable living expenses. Be specific with dates and amounts, such as

   “Without access to this account, I cannot meet payroll for 12 employees on [specific date].”

   Attach this to your CDP request or hardship release request.

9. Step 9: Request Immediate Levy Release if Necessary

   If the levy has already been executed and creates immediate economic hardship, contact the

   IRS immediately at the number on your levy notice or call 1-800-829-1040. Request a levy release due to economic hardship under IRC Section 6343. Provide your financial documentation and hardship statement.

10. Step 10: Stop Using the Levied Account

    Open a new bank account at a different financial institution as soon as possible. Direct all future deposits—including payroll, customer payments, and vendor receipts—to the new account. Do not deposit funds into the levied account, as the IRS may issue additional levies.

11. Step 11: Understand Levy Limitations

    Recognize that bank levies (Form 668-A) attach only to funds present when the levy is served.

    Future deposits made after the levy date are not frozen. However, the IRS can issue subsequent levies to capture additional funds. Wage levies (Form 668-W) remain in effect until released.

12. Step 12: Organize All IRS Correspondence

    Create a chronological file containing every IRS notice, letter, and document related to this debt.

    Include dates of phone calls, names of IRS representatives, and notes about discussions. This timeline establishes your good faith efforts in the event that disputes arise later.

13. Step 13: Contact the Assigned Revenue Officer

    Call the number on your notice or the IRS Collections line at 1-800-829-1040 to speak with the

    Revenue Officer assigned to your case. Explain that the levy affects a business operating account and request partial or conditional release based on documented hardship.

• Ignoring the CDP notice and assuming you have more time than the 30-day deadline
• Transferring funds after receiving a levy notice, which appears fraudulent
• Mixing business and personal funds without proper documentation
• Missing your CDP hearing or submitting incomplete financial documentation
• Agreeing to an installment plan without explicitly requesting the levy release
• Opening a new account at the same bank where the IRS can levy again
• Treating the levy as temporary without resolving the underlying tax debt
• A levy was placed within the last 21 days, and you need funds for immediate payroll
• You are unsure whether you qualify for a CDP hearing based on your notice history
• The levied account contains commingled personal and business funds, requiring
• You have multiple accounts at different banks and fear additional levies
• You are self-employed, and the IRS levied a personal account used for business
• Wage garnishment and bank levy release
• Tax lien removal and credit protection
• Offer in Compromise and installment agreements
• Unfiled tax return preparation
• IRS notice response and representation

14. Step 14: Address the Underlying Tax Debt

    A levy is a symptom of unpaid taxes. While fighting the levy, simultaneously address the original tax debt through payment arrangements, offers in compromise, or currently not collectible status. Establishing a payment plan can provide grounds for the release of a levy, but it does not automatically stop existing levies.

    Common Mistakes to Avoid

    When Professional Help Is Critical

    Seek immediate professional assistance if: accounting documentation operations

    Outcome Improvement Strategies

    Timing determines success. Requesting a CDP hearing immediately after receiving the notice halts the levy and compels the IRS to reassess your financial situation. Documentation matters—bank statements showing payroll deposits, expense records, and written hardship explanations give the Revenue Officer concrete reasons to release funds.

    Communication changes outcomes—calling the assigned Revenue Officer within three days of the notice often results in partial release or conditional arrangements. Compliance prevents escalation—establishing payment plans while disputing levies removes justification for additional collection actions.

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