Yes, the government can take money from your bank account, and it has several distinct legal tools for doing it. The IRS and state tax agencies can issue levies for unpaid taxes. The Treasury can intercept federal payments to satisfy other debts. Federal prosecutors can seize funds tied to criminal activity through forfeiture. And any government creditor with a court judgment against you can garnish your account. Each route carries its own notice requirements, deadlines, and protections you can use to push back.
IRS Bank Levies
The IRS is the government agency most likely to reach into a bank account. If you owe federal taxes and do not pay within 10 days of a notice and demand for payment, federal law lets the IRS issue a levy that orders your bank to hand over the funds.1Office of the Law Revision Counsel. 26 U.S. Code 6331 – Levy and Distraint
You get warning first. The IRS must send written notice of its intent to levy at least 30 days before it acts. That notice has to explain your appeal rights, the alternatives available to prevent the levy, and how to request a Collection Due Process hearing.1Office of the Law Revision Counsel. 26 U.S. Code 6331 – Levy and Distraint The one exception is a jeopardy determination, where the IRS believes collection is at risk and can skip the 30-day waiting period.
Once the levy reaches your bank, the account gets frozen and the bank holds the funds for 21 calendar days. You cannot withdraw during that window. If the IRS does not tell the bank to release the levy within those 21 days, the bank must turn the money over on the next business day.2eCFR. 26 CFR 301.6332-3 – The 21-Day Holding Period Applicable to Property Held by Banks Those 21 days are your window to negotiate, prove hardship, or resolve the debt.
State tax agencies use similar authority for unpaid state income or sales taxes. The process generally follows the federal pattern: assessment notice, intent to levy, chance to appeal, then a direction to your bank to turn over enough to cover the debt plus penalties and interest.
How to Stop or Release a Levy
Federal law requires the IRS to release a levy under several specific circumstances.3Office of the Law Revision Counsel. 26 USC 6343 – Authority to Release Levy and Return Property Knowing which one fits your situation is what saves the account.
- Enter an installment agreement. Once you have a payment plan in place, the IRS must release any existing levy, and it is generally barred from issuing new ones while an installment agreement is pending, in effect, or for 30 days after a rejection or termination. You can apply online through your IRS account or submit Form 9465 by mail.4Internal Revenue Service. Payment Plans; Installment Agreements
- Show economic hardship. If the levy prevents you from covering basic living expenses like rent, utilities, or food, the IRS must release a wage levy and may release a bank levy. Have detailed financial information ready when you call the number on the levy notice.5Internal Revenue Service. What if a Levy Is Causing a Hardship
- Submit an offer in compromise. This lets you settle for less than the full amount owed, and the IRS suspends other collection activity, including levies, while it evaluates the offer. You need to have filed all required returns and cannot be in an open bankruptcy.6Internal Revenue Service. Offer in Compromise
- Check the collection deadline. The IRS has 10 years from the assessment date to collect a tax. After that window closes, the debt is unenforceable and any levy must be released.7Office of the Law Revision Counsel. 26 U.S. Code 6502 – Collection After Assessment
The Treasury Offset Program
The Treasury Offset Program is not a bank levy. Instead of pulling money from your account, it intercepts federal payments heading to you: tax refunds, Social Security benefits, federal employee salaries. It covers defaulted federal student loans, overdue child support, and other debts owed to federal or state agencies.8Office of the Law Revision Counsel. 31 U.S. Code 3716 – Administrative Offset
Before an offset, the creditor agency must give you at least 60 days of written notice. The notice has to state the type and amount of the debt, your right to inspect agency records, your right to request a review, and your option to negotiate a repayment plan.9Bureau of the Fiscal Service. TOP Program Rules and Requirements Fact Sheet If the debt is wrong or already paid, that 60 days is when to act.
Social Security payments get extra protection. The offset cannot exceed 15% of the monthly benefit, and if the monthly benefit is $750 or less, it cannot be offset at all. Someone receiving $650 a month keeps the full payment.10eCFR. 31 CFR 285.4 – Offset of Federal Benefit Payments to Collect Past-Due, Legally Enforceable Nontax Debt Supplemental Security Income is completely exempt from the offset program.
Asset Forfeiture
When the government suspects the money in an account is tied to criminal activity, forfeiture is the tool. There are two very different versions.
Criminal Forfeiture
Criminal forfeiture follows a conviction. When a court sentences a defendant for offenses like money laundering, fraud, or counterfeiting, it orders forfeiture of property involved in the crime or traceable to the proceeds.11Office of the Law Revision Counsel. 18 U.S. Code 982 – Criminal Forfeiture The action runs against the person, so the government has to prove guilt beyond a reasonable doubt first.
Civil Forfeiture
Civil forfeiture is the more aggressive tool. The case runs against the property itself, not the owner. No conviction is required, and in some cases no charges are ever filed against the account holder. Federal law authorizes seizure of bank funds believed to be proceeds of crimes like money laundering, fraud, or drug trafficking.12Office of the Law Revision Counsel. 18 USC 981 – Civil Forfeiture
Under the Civil Asset Forfeiture Reform Act of 2000, the government must prove by a preponderance of the evidence that the property is forfeitable. Owners can raise an innocent owner defense: the claimant shows they either did not know about the illegal conduct or took reasonable steps to stop it once they learned. If you acquired the property after the illegal conduct, you can defend by proving you were a good-faith purchaser with no reason to know the property was subject to forfeiture.13Office of the Law Revision Counsel. 18 USC 983 – General Rules for Civil Forfeiture Proceedings
Court-Ordered Garnishment
When a government entity wins a court judgment against you for unpaid fines, restitution, or other financial obligations, it can enforce that judgment through a writ of garnishment. The court order tells your bank to freeze a specified amount and transfer it to satisfy the debt.
Your bank has no discretion. Once served with a valid garnishment order, it must comply. Unless you claim an exemption or challenge the garnishment, the money is transferred. Most states require the creditor to include a notice of exemptions with the papers, explaining which funds are protected and how to file a claim. The deadlines are usually short, so acting on that notice quickly matters.
Funds That Are Protected From Seizure
Not everything in your account is fair game.
Federal Benefits Get Automatic Protection
When a garnishment order hits an account that receives direct-deposited federal benefits, banks are required to protect a certain amount automatically. The covered categories include Social Security, Supplemental Security Income, Veterans Affairs benefits, Railroad Retirement benefits, and federal employee retirement benefits.14eCFR. Part 212 – Garnishment of Accounts Containing Federal Benefit Payments
The bank looks back at the previous two months of deposits. Whatever amount of protected federal benefits was deposited during that period stays accessible, and the bank cannot freeze it in response to the garnishment. You do not have to file paperwork or claim an exemption for this to work.15Bureau of the Fiscal Service. Guidelines for Garnishment of Accounts Containing Federal Benefit Payments
Property the IRS Cannot Levy
Even the IRS has limits. Federal law exempts several categories of property from levy, including unemployment benefits, workers’ compensation, and the wages needed to comply with a pre-existing child support order.16Office of the Law Revision Counsel. 26 U.S. Code 6334 – Property Exempt From Levy Household goods and personal effects are protected up to $6,250 in value, and a portion of wages is exempt based on the standard deduction and number of dependents.
These exemptions apply specifically to IRS levies. State tax agencies and other creditors work under different rules. Many states set a minimum bank account balance that judgment creditors cannot reach, though the thresholds vary widely.
What Happens With a Joint Account
Joint accounts create a real vulnerability. If one co-owner owes the debt, the government can generally levy or garnish the entire account. The law in most places presumes both account holders have equal rights to all the funds, regardless of who deposited what.
A non-debtor co-owner can fight to recover their share, but the burden of proof falls on them. Keeping records of your deposits, such as pay stubs, direct deposit confirmations, and statements showing the source of funds, is the best way to establish traceable contributions. If protected federal benefits are deposited in your name, the two-month lookback still applies.
For IRS levies specifically, a non-debtor co-owner can file an administrative claim for wrongful levy under Internal Revenue Code section 6343(b), generally within two years of the seizure. You can also sue under section 7426 to recover wrongfully levied property within the same two-year window.17Internal Revenue Service. Publication 594 – The IRS Collection Process When any levy or garnishment notice arrives, respond immediately. Missing the deadline usually means losing the chance to protect your money.
Bank Fees for Processing a Levy
Most banks charge an administrative fee when they process a levy or garnishment, typically $75 to $125. The fee comes out of your account on top of what the government takes, and banks often charge it even if the levy pulls no funds. Check your account agreement for your bank’s specific schedule, because these charges add up if you face multiple levies.