Complete Guide to the Maryland Bank Levy Process

When taxpayers fall behind on state tax debt or unpaid taxes in Maryland, the Comptroller can enforce collection using a bank levy. This action freezes your bank account and seizes funds to satisfy the unpaid debt. Understanding how bank levies work is essential for any judgment debtor facing a levy process ordered by a levying officer under Maryland law.

Unlike wage garnishment, which removes part of income each pay period, a bank garnishment can empty the same account in a single action. Creditors typically use court rules, court orders, and court clerks to enforce a money judgment, but government agencies have direct authority. This makes it harder to protect business assets, exempt property, or exempt money such as supplemental security income or veterans' benefits.

This guide explains Maryland law on debt collection, notice requirements, and court judgment enforcement. It covers how a judgment creditor may rely on bank statements, why circuit court or district court proceedings matter, and how social security benefits or child support payments may be protected. By the end, you will know how to act quickly, avoid financial hardship, and file claims supported by financial statements and other documents if any errors occur.

Understanding Maryland Bank Levy

Maryland bank levies are among the most powerful enforcement tools available to the Comptroller. Understanding how they work compared to other methods helps clarify why they create such immediate disruption.

What a Maryland bank levy is

Legal authority: Creditors typically need a court order, but the Comptroller may issue levies directly under Maryland law, giving it stronger powers than private debt collection methods.
Immediate impact: Once a levy notice arrives, the bank freezes funds until the Comptroller directs whether to release or transfer them to cover the unpaid tax debt.
Connection to tax debt: Bank levies work specifically to enforce unpaid taxes that remain unresolved even after the Comptroller has mailed notices and attempted other collections.

How a bank levy differs from wage garnishment

One-time action: A levy can seize the maximum amount available in the account simultaneously, unlike wage garnishment, which spreads payments over many pay periods.
Greater disruption: Because the same account is frozen, daily expenses such as rent, utilities, or child support payments may fail if insufficient funds are available.
Different enforcement: Wage garnishment follows court rules, while Maryland law gives the Comptroller unique levy authority without securing a separate court judgment.

When the Comptroller typically uses a bank levy

After other efforts: Levies are usually issued when earlier steps like notices, liens, or refund interceptions have failed to secure payment of the outstanding balance.
Default on plans: If a taxpayer breaks an installment agreement, the Comptroller may freeze a bank account to recover as much money as possible.
Last resort measure: Bank levies work as a more aggressive action taken after milder debt collection tools do not resolve the debt in a reasonable timeframe.

Legal Authority and Oversight

Maryland law sets the legal framework allowing the Comptroller to levy on bank accounts. These statutes provide enforcement powers while ensuring certain taxpayer rights remain protected.

Role and powers of the Maryland Comptroller

Enforcement role: The Maryland Comptroller acts as the state’s levying officer, tax administrator, and collector of unpaid debt owed by individuals or businesses.
Direct levy powers: Unlike creditors, the Comptroller may bypass district court proceedings and issue orders directly to banks for collection purposes.
Mandatory compliance: Banks must legally freeze and report funds once a levy notice is received, leaving account holders without immediate access.

Key statutes: TG §13-812, §13-811, §13-806

Section 13-812: Grants the Comptroller power to direct banks to freeze accounts and transfer funds toward tax debt, ensuring balances can satisfy unpaid liabilities.
Section 13-811: Governs wage liens but supports the broader levy process by outlining how income enforcement works under Maryland law for unpaid taxes.
Section 13-806: Establishes that a lien remains valid for 20 years unless fully paid, giving the Comptroller extended time to enforce collections against property.

Due process and required notices

Notice requirement: The Comptroller must notify the taxpayer by certified mail within ten business days after the bank freezes the account under the levy.
Challenge option: The taxpayer has ten days from the mailing date to file a formal challenge in circuit court, which is the only proper venue for review.
Legal limits: Court rules allow challenges to mistakes in the levy process but not to the original assessment of the underlying tax debt already determined.

Triggers and Early Warning Signs

Bank levies do not happen without warning. Certain taxpayer actions and missed deadlines trigger the Comptroller’s use of this tool.

Common triggers: nonfiling, underpayment, audit, plan default

Nonfiling issues: Failing to submit required tax returns can quickly lead to state assessments, interest, and the possibility of forced debt collection.
Underpayment: Filing tax returns but paying less than the total due causes escalating notices and can eventually lead to a levy against the account.
Audit assessments: Ignoring or failing to pay an audit assessment means the Comptroller may enforce collection directly through a bank levy order.
Payment defaults: When taxpayers break payment agreements, the Comptroller may immediately target the same account to recover unpaid balances.

From notices to liens: how enforcement escalates

Collection notices: The Comptroller sends letters warning that debt remains unpaid and directing taxpayers to respond before enforcement begins.
Tax liens: The Comptroller may file a lien that creates a money judgment against personal property, allowing more aggressive future actions.
Public records: Liens recorded through the court clerk become public, damaging credit and creating pressure for taxpayers to resolve the debt.
Final demands: The last round of notices warns taxpayers that bank accounts may be levied if balances are not fully paid immediately.

Final demands and indicators that a levy is imminent

Language in notices: Specific references to bank garnishment or levy process signal that the Comptroller is preparing more vigorous enforcement.
Expired deadlines: Ignoring certified mail notices past their deadlines often results in immediate enforcement against bank accounts.
Threat of seizure: Warnings that money will be levied unless the balance is fully paid usually represent the last chance to respond.
No further contact: If other parties stop sending payment reminders, taxpayers should expect legal action by the Comptroller to be underway.

The Bank Levy Process Step-by-Step

The levy process follows defined steps that determine how funds are seized and the options for the judgment debtor.

Step 1: Comptroller identifies bank account

The Comptroller identifies your bank account and issues a levy notice. It includes your identifying details, the amount owed, and instructions to the bank. Under state law, exempt property, like certain benefits, must be protected, but the bank initially freezes all funds.

Step 2: Bank freezes funds

Once the notice arrives, the bank freezes the same or multiple accounts. Withdrawals, transfers, or direct deposit access are blocked immediately. Bank statements show the freeze, though no money has been transferred.

Step 3: Bank reports to the Comptroller

The bank must notify the Comptroller of the total funds held within 30 days. If any accounts are jointly owned, this is reported as well. Court clerk approval is unnecessary, but the Comptroller records the report for enforcement.

Step 4: The Taxpayer receives notice

The Comptroller mails a notice to the taxpayer within 10 business days. Sent by certified mail, it outlines the levy process, the bank involved, and the debt balance. It also informs the judgment debtor of the right to challenge in circuit court.

Step 5: 10-day challenge window

The taxpayer has 10 days to contest the levy. Depending on the case, this filing is legally required in the district or circuit court. A tentative ruling may be issued if errors are found, and the judge decides whether funds must remain frozen.

Step 6: Collection or release of funds

If no challenge is filed, the bank transfers money up to the maximum amount listed in the notice. Once funds are delivered, the tax debt is treated as fully paid to that extent. The Comptroller may release the levy or adjust the balance. If errors exist

What Funds and Accounts Can Be Seized

A Maryland bank levy can affect different accounts and balances depending on the taxpayer's financial situation. The Comptroller has broad authority, but certain exemptions may apply under state and federal law.

Impact on single vs. multiple accounts at the same bank

Full reach: A levy may freeze checking and savings accounts at the same bank, applying to the total balance available on the service date.
Combined effect: When taxpayers hold more than one account, balances are aggregated, and the levy is applied to the sum of the total debt.
No separation: Maintaining separate accounts within one institution does not protect money, as the levy applies across accounts until the lien is satisfied.

New deposits and practical “continuing” effects

Account freeze: Maryland law does not require ongoing levies, yet banks often freeze accounts completely until instructed otherwise by the Comptroller’s office.
Deposit impact: Direct deposits made after the service may be unavailable because banks treat frozen accounts as inaccessible until an official release.
Uncertainty: This ongoing freeze creates hardship because taxpayers cannot reliably access new income, even if it was not in the account at levy time.

Bank processing fees and how they are applied

Fee deduction: Financial institutions may impose administrative processing charges for handling levies, and those fees are subtracted from account balances before transfer.
Reduced balance: These fees reduce the amount applied to the debt, leaving the taxpayer liable for any balance the levy does not cover.
No waiver: Processing fees apply regardless of financial hardship, adding strain on individuals already dealing with frozen accounts and collection enforcement.

How Much Maryland Can Take

The amount seized in a Maryland bank levy depends on the account balance and the tax lien amount. The Comptroller cannot take more than the total debt owed, but can freeze all available funds.

Maximum seizure: available balance vs. lien amount

Two limits: The bank must freeze whichever is less: the current account balance or the total lien amount included in the Comptroller’s levy notice.
Debt match: If account balances exceed the tax debt owed, the bank only transfers funds equaling the lien amount directly to the Comptroller’s office.
Balance shortfall: If balances are lower than the tax debt, the bank seizes all funds, and taxpayers still owe the remaining unpaid balance.

Timing considerations and day-of-levy scenarios

Snapshot effect: A levy applies only to funds present when the bank receives notice, creating a strict snapshot of account balances.
Deposit timing: Deposits made shortly before service can be seized, while deposits arriving afterward may be held depending on the bank’s internal policies.
Unexpected impact: Taxpayers often face hardship when paychecks deposited the same day are seized, leaving them unable to cover immediate living expenses.

Illustrative edge cases to expect

Joint accounts: Maryland levies may freeze joint accounts fully, requiring non-liable owners to file claims proving their share should be exempt from seizure.
Low balances: Even accounts holding small balances may be frozen, causing bounced checks and preventing taxpayers from covering basic needs or routine expenses.
Business accounts: Corporate accounts may be frozen if tax liabilities attach to officers, creating exposure for personal and business-owned financial assets.

Stopping or Reversing a Levy

Receiving notice of a levy does not mean funds are automatically lost forever. If taxpayers respond quickly and provide the required information, they can stop or reverse the action.

Full Payments

Immediate release: Paying the full balance immediately is the fastest option, allowing the Comptroller to direct banks to release seized funds without delay.
Direct contact: Taxpayers must coordinate directly with the Collections Division, since banks require written confirmation before releasing frozen accounts.
Proof required: Banks will not release funds unless they receive written authorization from the Comptroller confirming payment was received in full.

Installment agreement or other arrangements

Payment plan: Taxpayers unable to pay in full may request an installment agreement, which can pause enforcement once payments begin under documented terms.
Negotiated relief: The Comptroller may agree to suspend levies if taxpayers sign formal agreements showing consistent efforts to resolve outstanding debts.
Written terms: All agreements must be in writing to be enforceable, since verbal promises cannot bind the Comptroller or prevent further collection.

Filing a court challenge: grounds, evidence, deadlines

Ten-day limit: Taxpayers have ten days to file challenges in court, or the levy automatically continues until funds are fully transferred.
Valid grounds: Challenges may be based on identity mistakes, incorrect account ownership, or inaccuracies in the lien amount contained within the levy notice.
Proof documents: Courts expect strong evidence, such as financial statements, account records, or other documents, to support taxpayer claims against levy enforcement.

Emergency hardship relief options

Financial hardship: Taxpayers facing severe hardship can petition courts, demonstrating that the levy prevents them from covering essential expenses like housing or utilities.
Court discretion: Judges may weigh hardship against collection interests, sometimes ordering partial relief while requiring payment plans to continue reducing debt.
Temporary relief: Even when hardship is proven, courts treat relief as temporary, and the taxpayer must still resolve the unpaid debt.

Special Ownership Situations

Not all bank accounts are owned solely by the taxpayer. The Comptroller’s levy powers can affect joint accounts, business accounts, and certain protected deposits, creating challenges for others linked to the funds.

Joint accounts and rights of non-liable owners

Maryland bank levies may freeze joint accounts even when only one account holder owes tax debt. The innocent owner can challenge the action by filing a claim in circuit court within ten days of receiving notice. If successful, the court may release funds belonging to the non-liable owner, restoring access to their money.

Business accounts and personal officer liability

Business bank accounts may be subject to levy when the business itself owes Maryland tax debt. Corporate officers holding at least 20% ownership may be personally liable for unpaid business taxes. In such cases, the Comptroller may pursue personal and business assets, exposing officers to dual risks of bank levies and collection enforcement.

Trusts, estates, and fiduciary accounts

Trust and estate accounts may face levy enforcement if the taxpayer has beneficial ownership or control over funds. Fiduciaries, such as trustees or executors, must provide documentation showing that money belongs to the trust or estate rather than the debtor. Circuit courts typically review these cases to determine whether the funds qualify as exempt property under state law.

Federal benefit deposits and potential protections

Federal benefits deposited into bank accounts, such as Social Security benefits or veterans' benefits, may qualify as exempt money under federal law. However, banks often freeze these accounts initially, requiring account holders to file release claims. Current federal rules require banks to automatically protect at least two months of qualifying direct deposit benefits from levy enforcement.

Duration, Statute of Limitations, and Releases

Bank levies are not indefinite, but Maryland law gives the Comptroller broad authority to enforce debts over many years. Understanding duration and release conditions helps taxpayers know what to expect.

Twenty-year lien duration and how it matters

Lien length: Maryland tax liens remain enforceable for 20 years, allowing the Comptroller extended opportunities to use levies or other debt collection tools.
Collection window: This long timeframe allows repeated collection actions, increasing the likelihood that taxpayers will eventually face levy enforcement.
Extended impact: Liens can remain active for decades, limiting credit opportunities and exposing accounts to seizure until debts are satisfied or expire.

When levees end or are released

Debt satisfied: Once the debt is fully paid, the Comptroller issues release notices, directing banks to restore access to accounts and frozen balances.
Hardship relief: Levies may also be released when taxpayers demonstrate financial hardship, showing that enforcement prevents them from covering necessary living costs.
Error found: If levy notices contain errors in identity, ownership, or amounts owed, courts may order the Comptroller to release frozen accounts.

Repeat levies and ongoing risk if balances remain..

Multiple levies: The Comptroller may serve repeated levy notices until debts are satisfied, meaning the risk continues as long as balances remain unpaid.
Unresolved debt: Even after initial levies, taxpayers remain liable for unpaid balances, exposing them to additional enforcement actions and collection attempts.
Continuous risk: Until balances are cleared, Maryland taxpayers may experience multiple freezes across different accounts, often without warning.

Consequences of Ignoring a Levy

Failing to respond to a Maryland bank levy can worsen financial and legal problems. Beyond frozen accounts, taxpayers may face credit damage, mounting debt, and additional enforcement.

Immediate cash-flow disruptions and bank fees

Account inaccessible: Frozen funds prevent taxpayers from paying rent, utilities, or child support, leading to bounced checks and additional bank service charges.
Overdraft risks: Automatic debits may fail, causing overdraft fees and damaging relationships with landlords, lenders, or other essential service providers.
Fee burden: Banks deduct levy processing fees directly from frozen balances, reducing funds available for debt repayment and worsening taxpayer hardship.

Credit, licensing, and reputational impacts

Credit scores: Tax liens harm credit significantly, making it difficult to obtain mortgages, loans, or even favorable insurance rates for many years.
Licenses affected: Maryland may restrict or refuse business, motor vehicle, or professional license renewals until the tax debt is resolved fully.
Public exposure: Delinquent taxpayers risk being listed on public registries, which damages professional reputations and may discourage vendors or partners.

Additional enforcement actions to expect

Repeat levies: The Comptroller can issue successive levies against other accounts until the entire tax debt is satisfied or resolved.
Wage garnishment: If bank levies do not recover enough funds, wage garnishment may follow, reducing income each pay period until the balance clears.
Property seizures: Assets such as vehicles or business property may be seized under state law if unpaid taxes remain after bank levy attempts.

Action Plan: First 24 Hours, 5 Days, and 10 Days

A structured timeline helps taxpayers respond effectively to a bank levy. Immediate action reduces damage, preserves legal rights, and may even stop collection.

First 24 hours: verify, call, and document

Read notice: Carefully review the Comptroller’s letter for amounts, deadlines, and instructions, since missing details can cost valuable opportunities to respond.
Contact Comptroller: Call the Collections Division immediately to confirm debt balances and explore available options, including payoff or installment agreements.
Gather evidence: Collect bank statements, tax records, and other documents to verify the balance and prepare for challenges or hardship claims.

Next 5 days: options analysis and submissions

Hire help: Consult a tax attorney or CPA quickly, as professional guidance can protect rights and improve negotiations with the Comptroller’s office.
Evaluate options: Decide whether to pay, request a payment plan, or file a hardship claim supported by financial statements and related evidence.
File paperwork: Submit required forms or appeals within this period, ensuring documents are certified and retained for records in case of disputes.

By day 10: file a challenge or finalize resolution

Court challenge: File a challenge in circuit court if grounds exist, such as identity errors, incorrect balances, or exempt funds being levied.
Formalize payment: If not challenging, finalize installment agreements or payments, ensuring everything is documented and confirmed by the Comptroller’s office.
Avoid default: Missing the 10-day deadline ends the right to challenge, forcing taxpayers to accept enforcement even if errors occurred.

Prevention and Long-Term Compliance

Avoiding future levies requires consistent compliance and proactive financial planning. Staying informed and organized helps taxpayers reduce risks while maintaining access to essential funds.

Filing and payment habits that avoid levies

File promptly: Always file tax returns on time, even when payment is impossible, since late filing creates larger penalties and faster enforcement.
Pay consistently: Make partial or estimated payments when full payment is impossible, reducing balances and showing good-faith compliance with state law.
Respond quickly: Always reply to Comptroller notices before deadlines expire, since silence increases the likelihood of levy enforcement against accounts.

Monitoring your account and address updates

Track balances: Regularly check Maryland’s online tax account system for balances, payments, and notices to prevent surprise enforcement actions.
Update addresses: Ensure the Comptroller always has a current mailing address since certified mail is the primary method of sending notices.
Review activity: Monitor bank statements frequently for unusual activity, since early detection can allow faster response to levy actions.

Working with a qualified tax professional

Expert guidance: Tax attorneys or CPAs understand Maryland law and can negotiate with the Comptroller more effectively than taxpayers working alone.
Strategic planning: Professionals can develop compliance strategies that protect assets while reducing risks of future levies or wage garnishments.
Documentation support: Advisors ensure all required documents are filed correctly and on time, avoiding technical mistakes that can harm taxpayer cases.

Frequently Asked Questions

How much notice does the Comptroller provide before a Maryland bank levy?

Maryland law does not require advance notice before levying a bank account. However, taxpayers usually receive prior collection notices, liens, and final demands. The first official levy notice typically arrives after the bank freezes the account, and the Comptroller mails confirmation within ten business days of receiving the bank’s compliance report.

Can Maryland levy a joint bank account when only one spouse owes taxes?

Yes, Maryland can levy joint bank accounts even if only one spouse owes unpaid taxes. The innocent spouse may challenge the levy in circuit court by filing within ten days of receiving notice. Supporting documents like bank statements or other financial records are usually required to prove ownership and secure the release of the non-liable spouse’s funds.

What happens if my bank account balance exceeds my Maryland tax debt?

If the balance is smaller than the total debt, the bank transfers all available funds to the Comptroller. The unpaid portion of the tax debt remains outstanding and collectible. The Comptroller may issue new bank levies, wage garnishments, or pursue property seizures until the entire liability is satisfied or resolved through agreement.

Do deposits made after a levy remain frozen, too?

Deposits made after a levy may also be frozen because many banks treat levy orders as complete account freezes. Although Maryland law does not require continuing levies, institutions often block later deposits until explicit release instructions are received. This can prevent access to essential funds, including paychecks, direct deposit benefits, or other income sources needed for living expenses.

Can I challenge a levy if I dispute the original tax assessment amount?

Maryland law does not allow challenges to levy actions based on the underlying tax assessment. Levy challenges are limited to identity errors, account ownership mistakes, incorrect balances, or exempt property claims. Taxpayers disputing original tax liability must file appeals with the Maryland Tax Court within statutory deadlines instead of using the levy challenge process.

How long do Maryland tax liens last, and can repeated levies occur?

Maryland tax liens last 20 years from the original assessment date, allowing long-term enforcement of unpaid debts. The Comptroller may issue multiple bank levies, wage garnishments, or property seizures until the debt is fully resolved. Taxpayers who fail to settle balances remain exposed to collection risks throughout the lien’s full legal duration.