IRS Bank Levy in Sachse, TX: SouthState Bank Rejected IRS Form 668-D and Over $50,000 Went to the IRS

The problem was no longer convincing the IRS to release the money. We had accomplished that. The problem became getting the IRS-approved release through SouthState Bank’s internal procedures before the bank surrendered the funds.

What followed included multiple unsuccessful IRS fax attempts, an IRS-generated Form 668-D that SouthState would not accept from our office, four different SouthState telephone numbers supplied to IRS personnel, unsuccessful attempts to establish the direct telephone contact SouthState required, and a statement from the SouthState representative that the bank had not successfully received IRS faxes since 2018.

SouthState also would not call the IRS itself to verify the release.

Ultimately, more than $50,000 was sent to the IRS even though the IRS had already determined that hardship existed and had authorized release of the levy.

The IRS Had Already Approved the Bank Levy Release

Executive Tax Solution represented the taxpayer before the IRS under a valid Power of Attorney. We provided the financial information required for the IRS to evaluate the taxpayer’s ability to pay and the effect the levy was having on the taxpayer’s ability to meet reasonable living expenses.

The IRS agreed that economic hardship existed and approved Currently Not Collectible status, commonly called CNC. The IRS representative handling the matter also authorized release of the bank levy.

This distinction is important. We were not still asking SouthState Bank to delay collection while we tried to persuade the IRS to provide relief. The IRS collection determination had already been made.

The official document used to release this type of levy is Form 668-D, Release of Levy/Release of Property from Levy.

Form 668-D is an IRS-generated document used to notify a bank, employer, or other levy source that property is being released from an IRS levy. IRS procedures specifically provide for the use of Form 668-D when a levy needs to be released, including cases involving economic hardship.

In this case, the IRS had authorized that release.

SouthState Bank Would Not Accept the IRS-Generated Form 668-D From Our Office

The IRS attempted to fax the Form 668-D directly to SouthState Bank. Those attempts were unsuccessful.

Because the direct IRS-to-SouthState fax transmissions were not going through, we had the IRS fax the approved Form 668-D to Executive Tax Solution.

That transmission worked.

We now possessed the actual IRS-generated Form 668-D. It was not a document created by our firm. It was not a letter from the taxpayer asking the bank for a favor. It was not our interpretation of what an IRS employee had told us.

It was the government’s actual levy-release document, generated after the IRS had authorized the release and containing identifying information associated with the IRS action and the IRS employee involved.

We were prepared to immediately provide that Form 668-D to SouthState Bank.

SouthState would not accept it from Executive Tax Solution.

We were advised that SouthState’s internal policy required the Form 668-D to be transmitted directly from the IRS to the bank.

That requirement created an extraordinary problem because the direct IRS-to-SouthState fax transmissions were already failing.

SouthState Told Us It Had Not Successfully Received IRS Faxes Since 2018

During our communications with SouthState Bank, the representative handling the levy told us that SouthState had not successfully received faxes from the IRS since 2018.

That statement was particularly troubling in light of the bank’s requirement that the Form 668-D had to be faxed directly from the IRS.

SouthState would not accept the IRS-generated document from the taxpayer’s authorized representative because it had not arrived directly from the IRS. At the same time, according to the bank representative, SouthState had experienced problems successfully receiving IRS faxes going back years.

Nevertheless, the bank continued to require direct IRS transmission.

The IRS attempted the fax more than once. The direct transmissions still did not successfully reach SouthState in a manner the bank would accept and process.

Meanwhile, the IRS had no difficulty faxing the same Form 668-D to Executive Tax Solution.

We had the official release in our hands. SouthState would not accept it.

SouthState Then Required an IRS Agent to Personally Call the Bank

Faxing the release was not the only issue.

SouthState also told us that an IRS employee needed to personally telephone the bank to confirm the release.

That created another operational problem. The IRS Collections personnel with whom we were working did not have the unrestricted ability to simply place outside calls to a financial institution whenever requested.

We nevertheless tried to satisfy SouthState’s requirement.

Executive Tax Solution obtained four different SouthState telephone numbers and provided all four numbers to IRS personnel.

We did more than simply give the IRS a list of phone numbers and hope someone eventually called.

We remained on the telephone with IRS personnel while they attempted to establish contact using the SouthState numbers we had been given.

Those attempts did not produce the direct communication SouthState required to release the funds.

This was occurring while more than $50,000 remained frozen and the time for resolving the levy was continuing to run.

We Asked SouthState Bank to Call the IRS and Verify the Release

At that point, there was an obvious alternative.

If SouthState would not accept the IRS-generated Form 668-D from Executive Tax Solution, its fax system was not successfully receiving the IRS transmissions, and the IRS Collections personnel were unable to establish the particular outside telephone contact SouthState demanded, the bank could attempt to verify the release directly with the IRS.

We asked the SouthState representative to make that call.

She refused.

When we asked SouthState to contact the IRS and verify the release itself, the bank representative declined.

SouthState had provided additional time while the matter was being worked, but that additional time ultimately expired.

More than $50,000 was then surrendered to the IRS.

Why Form 668-D Matters in an IRS Bank Levy

Form 668-D is the IRS’s official Release of Levy/Release of Property from Levy.

Once the IRS determines that levy relief is appropriate, the purpose of Form 668-D is to communicate that decision to the party holding the taxpayer’s property.

The IRS Internal Revenue Manual specifically addresses situations involving economic hardship. Where the IRS financial analysis establishes that the taxpayer merits a full or partial levy release to relieve economic hardship, IRS procedures state that the taxpayer has a statutory right to enough relief to end the hardship.

The same IRS procedures state that the levy release should be faxed or given to the taxpayer to provide to the levy source.

That provision is particularly relevant to what happened here.

When direct transmission between the IRS and SouthState failed, the IRS successfully provided the Form 668-D to Executive Tax Solution, the taxpayer’s authorized representative. We had the government’s actual release document and were prepared to provide it to the levy source.

SouthState’s internal procedures would not permit the bank to accept it from us.

SouthState’s Internal Procedures Became the Barrier to an IRS-Approved Release

Financial institutions obviously need procedures for authenticating documents involving customer accounts. A bank should be concerned about forged releases, fraudulent instructions, and unauthorized attempts to access customer funds.

That is not what occurred here.

The IRS had made the collection decision. The IRS had generated Form 668-D. The document had been successfully transmitted by the IRS to the taxpayer’s federally authorized representative. The document contained information through which its authenticity and the IRS action could be investigated or verified.

The problem was SouthState’s insistence upon a particular method of transmission and verification.

According to the bank representative, the Form 668-D had to arrive directly from the IRS. According to that same representative, SouthState had not successfully received IRS faxes since 2018. When the IRS direct faxes failed again, SouthState would not accept the IRS-generated form from Executive Tax Solution.

SouthState then required direct telephone contact from an IRS employee. We supplied four different telephone numbers and worked with IRS personnel while they attempted to make the required connection. That did not resolve the problem.

SouthState would not independently call the IRS to verify the release.

In our opinion, an internal bank procedure should not be allowed to frustrate implementation of a legitimate Treasury Department levy release when the authenticity of that release can be reasonably established.

The practical result of SouthState’s procedures in this case was that an IRS-approved levy release was never implemented and more than $50,000 was surrendered to the government.

The 21-Day IRS Bank Levy Holding Period

When the IRS serves a levy on a bank account, federal law generally provides a 21-calendar-day waiting period before the bank must surrender the captured funds to the IRS.

The money generally remains frozen during that period. The purpose of the waiting period is to provide time for the taxpayer to contact the IRS, resolve errors, establish appropriate collection arrangements, or obtain a levy release.

A standard bank levy generally captures funds in the account when the levy is received. It normally does not continuously capture deposits made after that date in the same way an ongoing wage levy operates.

The 21-day period only helps the taxpayer if an approved release can actually be delivered, accepted, and processed before the money is surrendered.

Our case illustrates why that final administrative step matters. We reached SouthState while the funds were still being held. The IRS determined that hardship existed. The IRS approved the release. Form 668-D was generated. Multiple attempts were made to complete SouthState’s required verification process.

The funds were still transferred because the release could not be processed under the bank’s requirements.

Can the IRS Release a Bank Levy Because of Economic Hardship?

Yes. An IRS bank levy may be released when the IRS determines that the collection action is creating immediate economic hardship.

Economic hardship generally means that the levy prevents an individual taxpayer from paying basic, reasonable living expenses. The IRS will ordinarily require financial information to make that determination.

That determination had already been made in this case.

The issue was not whether our taxpayer might qualify for hardship relief. The IRS had already approved it.

Can Money Be Returned After the Bank Has Already Sent It to the IRS?

Potentially, yes.

Once the bank has surrendered the money, the issue changes from obtaining a release of levy to determining whether the taxpayer qualifies for a return of levy proceeds.

Internal Revenue Code Section 6343(d) provides authority for the IRS to return levy proceeds under certain circumstances.

IRS procedures recognize several situations in which return of levy proceeds can be considered, including circumstances involving IRS procedures and economic hardship. The complete facts and administrative history must be reviewed before determining whether the requirements are satisfied.

That is one of the principal issues we are now examining in this case.

What This SouthState Bank Case Teaches Taxpayers Facing an IRS Bank Levy

If your bank account has been frozen by the IRS, obtaining approval for a release is only part of the job. You need to know exactly what your financial institution requires before it will process Form 668-D.

Find out which department handles IRS levies and releases. Confirm its fax number. Ask whether the bank accepts an IRS-generated Form 668-D provided by the taxpayer or authorized representative. Ask whether the document must originate directly from an IRS fax number. Ask what happens if the bank does not successfully receive IRS faxes. Ask whether the bank will independently contact the IRS to authenticate a release. Most importantly, confirm that the bank has actually received and processed the Form 668-D before assuming the levy has been stopped.

Executive Tax Solution handles IRS collection matters from our office in Sachse, Texas and represents taxpayers throughout Sachse, Garland, Wylie, Rowlett, Murphy, and surrounding North Texas communities.

Our work includes IRS bank levies, wage levies, Currently Not Collectible cases, installment agreements, Offers in Compromise, penalty issues, unfiled returns, tax liens, and other serious IRS collection matters.

Frequently Asked Questions About IRS Bank Levies

How long does a bank hold money after receiving an IRS levy?

A bank generally holds funds subject to an IRS levy for 21 calendar days before surrendering the money to the IRS. The waiting period gives the taxpayer time to contact the IRS, correct errors, establish a collection arrangement, prove economic hardship, or obtain a levy release.

What is IRS Form 668-D?

Form 668-D, Release of Levy/Release of Property from Levy, is the IRS document used to release property from an IRS levy. When the IRS determines that a bank levy should be released, Form 668-D communicates that action to the bank or other levy source.

Can the IRS release a bank levy because of financial hardship?

Yes. The IRS may release a bank levy when it determines that the levy is creating immediate economic hardship. The IRS generally evaluates the taxpayer’s income, necessary living expenses, assets, and other financial information before making that determination.

What does Currently Not Collectible status mean?

Currently Not Collectible status means the IRS has determined that the taxpayer presently cannot pay the tax liability without creating financial hardship. CNC does not erase the tax debt, but active collection is generally suspended while the taxpayer remains unable to pay.

Does Currently Not Collectible status automatically release money already frozen by a bank?

No. An existing bank levy still needs to be released and the release needs to reach the financial institution handling the frozen funds. Our SouthState case demonstrates why receiving confirmation that CNC or hardship relief has been approved is not the same as confirming that the bank has actually processed Form 668-D.

If the IRS approves a levy release, is my bank account immediately safe?

Not necessarily. The bank holding the money must receive and process the levy release before the funds are surrendered. Confirm that the institution has actually received and accepted the release rather than relying solely on an IRS statement that the release was approved.

Can an Enrolled Agent represent me in an IRS bank levy case?

Yes. A federally licensed Enrolled Agent can represent a taxpayer before the IRS, obtain account information, provide financial documentation, communicate with IRS Collections, establish economic hardship when the facts support it, and request release of a bank levy.

Can the IRS give Form 668-D to the taxpayer or representative to provide to the bank?

IRS procedures specifically state that a levy release should be faxed or given to the taxpayer to provide to the levy source when the financial analysis shows that relief is required to alleviate economic hardship. This issue became particularly important in our SouthState Bank case because the IRS successfully provided the Form 668-D to Executive Tax Solution after direct IRS-to-bank fax transmissions failed.

What happened when SouthState Bank would not accept the Form 668-D from Executive Tax Solution?

SouthState required the release to come directly from the IRS. The IRS attempted multiple direct fax transmissions without success. The SouthState representative told us that the bank had not successfully received IRS faxes since 2018. The IRS then successfully faxed the official Form 668-D to Executive Tax Solution, but SouthState would not accept that IRS-generated document from our office.

Did SouthState require an IRS employee to call the bank?

Yes, in this case SouthState also required direct telephone confirmation from an IRS employee. Executive Tax Solution supplied IRS personnel with four different SouthState telephone numbers and remained on the telephone while IRS personnel attempted to establish the contact SouthState required. Those efforts did not successfully complete the verification.

Did Executive Tax Solution ask SouthState to call the IRS directly?

Yes. When the IRS-to-bank fax transmissions failed and direct telephone confirmation could not be established through the numbers provided, we asked the SouthState representative to contact the IRS and verify the release. She declined.

What if my bank says it cannot receive an IRS fax?

Address that problem immediately. Determine what alternative verification process the bank will accept and communicate that requirement to the IRS while the bank-levy holding period is still open. A failed fax can become a major issue when a bank refuses other methods of delivering or authenticating the Form 668-D.

Can IRS bank levy money be returned after the bank sends it to the IRS?

Yes, in certain circumstances the IRS has authority to return levy proceeds after the bank has surrendered them. Internal Revenue Code Section 6343(d) and related IRS procedures govern requests for return of levy proceeds. Whether the money can be returned depends on the facts and administrative history of the particular case.

What should I do if more than $50,000 is frozen by an IRS bank levy?

Act immediately. Determine when the bank received the levy, when the holding period expires, which department handles IRS levies, what documentation the institution requires for Form 668-D, whether economic hardship exists, and whether the bank has a reliable way to receive and verify an IRS levy release.

Does Executive Tax Solution handle IRS bank levies in Sachse, Garland, Wylie, Rowlett, and Murphy?

Yes. Executive Tax Solution is located in Sachse, Texas and represents taxpayers facing IRS bank levies, wage levies, back taxes, tax liens, and other IRS collection problems throughout Sachse, Garland, Wylie, Rowlett, Murphy, and the surrounding North Texas area.

Next Steps

The transfer of more than $50,000 to the IRS does not end this matter.

Executive Tax Solution is preserving and reviewing the complete administrative record, including the IRS hardship determination, Currently Not Collectible approval, the IRS-generated Form 668-D, the unsuccessful direct IRS fax attempts to SouthState, the successful IRS transmission of the Form 668-D to our office, our communications with SouthState Bank, the four SouthState telephone numbers provided to IRS personnel, the telephone attempts made while we remained on the line, SouthState’s statement concerning IRS fax communications dating back to 2018, the bank representative’s refusal to contact the IRS directly, and the eventual transfer and application of the levy proceeds.

We are examining the taxpayer’s eligibility for a written request for return of levy proceeds under Internal Revenue Code Section 6343(d), with particular attention to the fact that the IRS had already established economic hardship and authorized release of the levy before the money was surrendered.

We are also evaluating assistance through the Taxpayer Advocate Service because the IRS had already determined that collection hardship existed, yet the relief authorized by the IRS was not successfully implemented.

The circumstances surrounding SouthState Bank’s handling of the IRS-generated Form 668-D, its direct-transmission requirement, the reported longstanding inability to successfully receive IRS faxes, the requirement for direct IRS telephone contact, and the refusal to independently verify the release with the IRS will also be examined to determine what additional remedies may be available.

Finally, we will review the remaining IRS liability, the application of the more than $50,000 in levy proceeds, the taxpayer’s IRS account history, and the applicable Collection Statute Expiration Date before determining the final resolution strategy.

The essential facts are straightforward: the IRS approved the hardship relief and levy release; Form 668-D was generated; the IRS made multiple attempts to fax the release directly to SouthState; SouthState told us it had not successfully received IRS faxes since 2018; the IRS successfully faxed the release to Executive Tax Solution; SouthState refused to accept it from us; IRS personnel attempted four different SouthState telephone numbers while we remained on the line; SouthState declined to call the IRS itself; and more than $50,000 was ultimately surrendered.

Those facts deserve further review, and that is exactly what we intend to do.

Need help with an IRS bank levy in North Texas?

Allen Lenth, EA-MBA
Executive Tax Solution — Your Tax Defense Team
Sachse, Texas
Phone: (469) 262-6525
IRSDecoder.com