Reasons the IRS will release a levy

The Internal Revenue Code specifically provides that the IRS must release a levy if they determine that

You paid the amount you owe

The period for collection ended prior to the levy being issued

It will help you pay your taxes

You enter into an Installment Agreement and the terms of the agreement don’t allow for the levy to continue

The levy creates an economic hardship, meaning the IRS has determined the levy prevents you from meeting basic, reasonable living expenses, or

The value of your property is more than the amount owed and releasing the levy won’t hinder the ability to collect the amount owed.

The IRS will also release a levy if it was issued improperly. For example the levy may be released if it was issued:

Against property exempt from seizure

Prematurely

Before the RIS sent you the required notice

While you were in bankruptcy and an automatic stay was in effect

Where the expenses of seizing and selling the levied property would be greater than the fair market value of the property

While an Installment Agreement request, Innocent Spouse Relief request, or Offer in Compromise was being considered or had been accepted and was in effect, or

While the Office of Appeals or Tax Court was considering a collection due process case and the levy wasn’t a Disqualified Employment Tax Levy to collect employment taxes, a state refund, a jeopardy levy, or to collect the tax debt of a federal contractor

While the Office of Appeals or Tax Court is considering an appeal of the denial of innocent spouse relief

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