How to Stop a Bank Levy in California

If Your Bank Account Is Frozen, You Must Act Now

 bank levy is one of the most aggressive tools the IRS or the Franchise Tax Board (FTB) can use to collect unpaid taxes. When a levy hits, your account is frozen—and your funds may be transferred to the government in as little as 10 days.

Whether the levy is from the IRS or California FTB, this is not a situation you can ignore. But with the right legal and financial steps, you may still be able to stop and prevent IRS bank levies, recover your funds, and resolve your tax debt on better terms.

This post explains exactly what to do—and when to do it—if you’ve received a bank levy notice in California.

What Is a Bank Levy?

A bank levy occurs when a tax authority seizes funds directly from your checking or savings account to cover unpaid taxes. It’s different from a wage garnishment, which takes money from your paycheck.

Levies can be issued by:

• The IRS for unpaid federal income taxes
• The California FTB for state income tax debt
• The California Employment Development Department (EDD) for payroll-related taxes
• The California Department of Tax and Fee Administration (CDTFA) for sales/use tax and business fees

Knowing who issued the levy is the first step to understand the differences and strategies for each agency when planning your response.

Step-by-Step: How to Stop a Bank Levy

1. Identify the Source

The notice or your bank will usually indicate who issued the levy—IRS, FTB, or another California agency. This determines your strategy.

Related: FTB Levy vs. IRS Levy – What California Taxpayers Need to Know

2. Contact the Taxing Authority Immediately

You may have only days to negotiate a hold or reversal before your bank sends the money.

• Call the IRS or FTB and request a temporary Collection Hold
• Ask if you’re eligible for a Collection Due Process (CDP) hearing or equivalent hearing

3. Request a Levy Release

You may be able to secure a levy release if:

• You enter into an Installment Agreement
• You qualify for Currently Not Collectible status
• You submit an Offer in Compromise
• The levy is causing economic hardship
• The tax agency levied funds in error

4. File a Collection Appeal

If you received a Final Notice of Intent to Levy (e.g., IRS Letter 1058 or FTB Final Notice), you can file a CDP request using IRS Form 12153 or an FTB equivalent. This halts collections while your appeal is reviewed.

This is one of the most effective proactive steps to avoid enforcement and buy time for resolution.

Timing Is Everything

Once a levy hits, the bank freezes the funds immediately. After 10 days, they release the money to the tax authority unless you stop it in time.

• If you act before the 10-day window closes, you may be able to reverse or suspend the levy.
• If you act after, the money may already be gone—but you can still prevent future levies.

Can You Recover Funds After a Levy?

Sometimes, yes. If the levy caused undue hardship or was issued in error, you may be able to:

• File a refund claim with the IRS or FTB
• Request a levy reversal
• Demonstrate that the levy violated your appeal rights

However, the burden is on you—and success often depends on how quickly you take action.

This is why it’s essential to know your rights in California tax collections before the government takes permanent control of your funds.

How to Prevent Future Bank Levies

To avoid another levy, you’ll need to resolve your underlying tax debt. Options include:

• IRS or FTB Installment Agreements
• Offer in Compromise
• FTB Penalty Relief
• Audit Reconsideration

In some cases, your CPA can request a temporary hold to pause collections and avoid bank levies during hardship, giving you time to set up a longer-term solution.

Get Expert Help from a California Tax Resolution Firm

At Boulanger CPA and Consulting PC, we help California taxpayers:

• Stop active levies from the IRS, FTB, EDD, and CDTFA
• Protect their bank accounts and income
• Resolve tax debt without enforcement

We know the collections process inside and out—and we move fast.

Call  (657) 218-5700 or book online at  www.orangecounty.cpa

📣 About the Author

Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, a boutique tax resolution firm based in Orange County, California and trusted by high-income individuals and business owners across Southern California.

He is the author of Defend What’s Yours: A California Taxpayer’s Guide to Beating the IRS and FTB at Their Own Game, available now on Amazon. The book offers a step-by-step plan for resolving IRS and FTB tax debt without losing your business, your home, or your peace of mind.

With over a decade of experience resolving high-stakes IRS and State tax matters, Marc brings strategic insight to complex cases involving wage garnishments, bank levies, unfiled returns, and six-figure tax debts. He is known for helping clients reduce or eliminate tax liabilities through expertly negotiated settlements and compliance plans.

Marc is a Certified Public Accountant licensed in California and Oklahoma and holds the designation of Certified Tax Representation Consultant. He is a member of the American Society of Tax Problem Solvers (ASTPS) — the national organization founded by the educators and practitioners who have trained thousands of CPAs, EAs, and tax attorneys in IRS representation strategy.

Every case is handled with discretion, proven methodology, and direct CPA-led representation — not call center scripts.

📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.