CPA next steps when client receives bank account levy
Question askedMy client got a levy his bank account. As his CPA, what are my next steps?
Quick answer: Since you're contacting this site as a CPA acting for a client, I should clarify this is Hopkins CPA Firm's public consumer-facing tax information page — I can share what the IRS publications say generally about levies, collection actions, and appeal rights, but I can't advise you professional-to-professional on case strategy.
Here's what the documents cover on this topic:
What the IRS materials say about levies and collections
The IRS collection process — covering liens, levies, and related actions — is explained in a dedicated publication. As Publication 334 notes, Pub. 594, The IRS Collection Process, explains your rights and responsibilities regarding payment of federal taxes. That publication is described as covering: what to do when you owe taxes, including what to do if you get a tax bill and what to do if you think your bill is wrong, plus making installment payments, delaying collection action, and submitting an offer in compromise, and IRS collection actions — liens, releasing a lien, levies, releasing a levy, seizures and sales, and release of property.
Appeal rights on collection actions
If the client wants to dispute the levy, collection appeal rights are explained in detail in Pub. 1660, Collection Appeal Rights. More broadly, the Taxpayer Bill of Rights confirms taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary, and will respect all due process rights, including search and seizure protections, and will provide, where applicable, a collection due process hearing.
If wages (not just a bank account) were also being levied, Publication 15 notes employers who receive a Notice of Levy on Wages, Salary, and Other Income (a notice in the Form 668 series) must withhold amounts as described in the instructions for these forms, and Pub. 1494 has tables to figure the amount exempt from levy. That's a separate mechanism from a bank levy.
Also relevant:
- If there's a dispute about the underlying liability, note that if you don't agree with the examiner's proposed changes, you can appeal to the IRS Independent Office of Appeals — most differences can be settled without expensive and time-consuming court trials.
- The Taxpayer Advocate Service may be able to help if the levy is causing hardship: TAS can help you resolve problems that you can't resolve with the IRS, and their service is free — they can help if your problem is causing financial difficulty for you, your family, or your business, or you face an immediate threat of adverse action.
What it depends on:
- Whether the levy relates to income tax, payroll tax, or another liability
- Whether your client received the required prior notices (final notice of intent to levy, CDP hearing rights)
- Whether there's an existing installment agreement or pending offer in compromise
- State residency (Texas has no state income tax, so this is a federal-only matter for a Texas client)
Given that you're representing a client with an active levy, this is a time-sensitive matter — please consult Pub. 594 and Pub. 1660 directly, or have your firm's collection specialist review the notices for CDP hearing deadlines.
Sources relied upon
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IRS Publication 334 — Tax Guide for Small Business (Schedule C), p. 48
· see it highlighted in context
· official source (p. 48) ↗
“Collections. Pub. 594, The IRS Collection Process, explains your rights and responsibilities regarding payment of federal taxes. It describes the following.”
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IRS Publication 334 — Tax Guide for Small Business (Schedule C), p. 48
· see it highlighted in context
· official source (p. 48) ↗
“• What to do when you owe taxes. It describes what to do if you get a tax bill and what to do if you think your bill is wrong. It also covers making installment payments, delaying collection action, and submitting an offer in compromise.”
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IRS Publication 334 — Tax Guide for Small Business (Schedule C), p. 48
· see it highlighted in context
· official source (p. 48) ↗
“• IRS collection actions. It covers liens, releasing a lien, levies, releasing a levy, seizures and sales, and re-lease of property.”
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IRS Publication 334 — Tax Guide for Small Business (Schedule C), p. 48
· see it highlighted in context
· official source (p. 48) ↗
“Your collection appeal rights are explained in detail in Pub. 1660, Collection Appeal Rights.”
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IRS Publication 17 — Your Federal Income Tax (Individuals), p. 128
· see it highlighted in context
· official source (p. 128) ↗
“7. The Right to Privacy. Taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary, and will re-spect all due process rights, including search and seizure protections, and will provide, where applicable, a collection due process hearing.”
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IRS Publication 15 — Employer's Tax Guide (Circular E), p. 29
· see it highlighted in context
· official source (p. 29) ↗
“Amounts exempt from levy on wages, salary, and other income. If you receive a Notice of Levy on Wages, Salary, and Other Income (a notice in the Form 668 series), you must withhold amounts as described in the in-structions for these forms. Pub. 1494 has tables to figure the amount exempt from levy.”
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IRS Publication 334 — Tax Guide for Small Business (Schedule C), p. 48
· see it highlighted in context
· official source (p. 48) ↗
“Appeals. If you don’t agree with the examiner’s proposed changes, you can appeal to the IRS Independent Office of Appeals. Most differences can be settled without expensive and time -consuming court trials.”
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IRS Publication 538 — Accounting Periods and Methods, p. 22
· see it highlighted in context
· official source (p. 22) ↗
“TAS can help you resolve problems that you can’t resolve with the IRS. And their service is free. If you qualify for their assistance, you will be assigned to one advocate who will work with you throughout the process and will do everything possible to resolve your issue. TAS can help you if: • Your problem is causing financial difficulty for you, your family, or your business; • You face (or your…”
Quoted passages are extracted verbatim from the source documents by the citation system — they cannot be fabricated by the AI.
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