The Internal Revenue Service has announced an expansion of the IRS bank levy program aimed at taxpayers with substantial unpaid balances, particularly high earners with outstanding federal tax debt. Backed by Inflation Reduction Act funding, the move gives the agency more tools to collect funds through a levy program, including the ability to seize money from a taxpayer’s bank account or certain federal payments.
The IRS has outlined a detailed process for pursuing unpaid federal tax liability through its expanded enforcement tools. A bank levy is a form of legal seizure that allows the agency to take money directly from a taxpayer’s bank account or intercept federal payments disbursed to satisfy an outstanding federal tax debt.
Before enforcement, the IRS must issue a notice of intent followed by a final notice. These letters inform taxpayers of their owed amount, outline appeal rights, and provide 30 days to respond. If the debt is paid in full or a payment plan or installment agreement is approved, the collection ends before seizure. In certain circumstances, such as proven economic hardship, a levy release may also be granted.
Once the IRS issues a levy, the taxpayer’s financial institution must freeze the account for 21 days. During this period, taxpayers may still contact the IRS to negotiate. If no resolution is reached, the funds are transferred to the government as property to satisfy the debt. Unlike a lien, which is a legal claim, a levy creates direct seizure of your property.
The expanded federal payment levy program allows the IRS to withhold portions of federal payments continuously. This includes deductions from social security benefits, railroad retirement board benefits, military retirement payments, federal employee retirement annuities, and even state tax refunds or federal salaries. In some cases, contractor payments and Medicaid services reimbursements may also be subject to withholding under the levy program.
The IRS has long faced challenges pursuing unpaid federal tax debt, with billions in lost revenue contributing to the nation’s “tax gap.” Past IRS issues included outdated technology, limited staff, and inconsistent follow-through on delinquent accounts. According to the Government Accountability Office, these weaknesses made it difficult for the internal revenue system to track and collect funds efficiently.
For years, the agency sent millions of collection notices, but it lacked the resources to follow through. Many taxpayers with significant tax liabilities could delay enforcement or avoid resolution altogether, resulting in a backlog of cases involving substantial federal tax liability and growing amounts of outstanding federal tax debt.
The Inflation Reduction Act provided the IRS with new funding to address these shortcomings. Technology upgrades and data analytics allow the agency to identify high-value delinquencies more effectively. By strengthening its levy program and expanding the federal payment levy program, the IRS is better positioned to seize funds from a bank account, intercept federal payments, and ensure that more delinquent taxpayers pay the amount they owe or enter into an installment agreement.
In announcing the IRS bank levy program expansion, IRS Commissioner Danny Werfel stressed fairness: “At this time of year when millions of hard-working people are doing the right thing by filing a tax return, we cannot tolerate those with higher incomes failing to meet this basic civic duty.” He added that the agency will use every available levy program tool to address unpaid federal tax obligations.
Tax professionals note that many taxpayers at risk of legal seizure can avoid escalation by entering into a payment plan or installment agreement. Such arrangements prevent seizure of your property and can result in a levy release if the taxpayer demonstrates compliance. Advocates warn that if ignored, a notice of intent can quickly lead to a freeze on a bank account or wage garnishment.
While modernization has helped, some experts remain cautious. They highlight that IRS administrative issues persist and that internal revenue systems must still process millions of cases fairly. Advocates argue that in certain circumstances—such as economic hardship—the IRS may need to pause or adjust enforcement rather than proceed with such a levy.
While the IRS has expanded its enforcement, taxpayers still retain key rights. A levy creates a direct legal claim on personal property or a bank account, but enforcement can be delayed or stopped in certain circumstances. For example, those facing economic hardship may request a levy release or apply for Currently Not Collectible status. The IRS must also consider exemptions for basic living expenses before enforcing a wage levy on wages or federal salaries.
Taxpayers who receive a notice of intent should contact the IRS immediately. Taking action early can prevent a freeze on accounts or the seizure of your property. Standard solutions include negotiating a payment plan or installment agreement, which can halt enforcement. If the amount you owe cannot be paid in full, the IRS may accept partial payments through an offer in compromise. In addition, the collection ends before a levy if a taxpayer demonstrates eligibility for relief programs tied to federal tax debt or files documentation showing compliance.
The following authoritative sources provide detailed guidance for readers seeking additional information about the expanded levy program and related taxpayer protections. These pages often include a "page last reviewed" or "updated" notice, confirming the timeliness of official materials:
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