Yes, the IRS can levy a joint bank account, but only the account holder who owes the tax debt is responsible for the levy

When the IRS issues a levy against a bank account, it freezes the funds and takes money to pay a tax debt. If the account is joint — meaning two or more people own it — the IRS can still levy it. However, the IRS can only take the portion of the money that belongs to the person who owes the tax. The other account holder's money should be protected, but protecting it requires action on your part.

The IRS sends the levy directly to the bank, not to you. The bank then freezes the entire account for 21 days while it sorts out who owns what. During this time, no one can withdraw money. After 21 days, the bank releases the funds that belong to the non-debtor spouse or co-owner, but only if that person files a claim of exemption with the bank.

Key Takeaways

  • The IRS can levy a joint bank account, but it can only take money that belongs to the person with the tax debt.
  • The bank freezes the entire account for 21 days after receiving the levy, even though only part of it may be owed to the IRS.
  • The non-debtor account holder must file a claim of exemption with the bank within the 21-day window to recover their share of the money.
  • If you are married and file taxes jointly, the IRS may be able to take the entire account balance under injured spouse relief rules, which are different from joint account protection.
  • The IRS must send you a notice of levy at least 30 days before it can take action, giving you time to pay the debt or request a hearing.

How the 21-day freeze works and what happens to the money

When a bank receives a levy from the IRS, it does not immediately hand over the money. Instead, it freezes the account for 21 days. During this time, the bank is supposed to contact the account holders and give them a chance to claim that some of the money belongs to someone other than the person who owes the tax.

After 21 days, the bank releases funds to the IRS based on what it knows. If only one person has claimed the money, the bank may release all of it. If the non-debtor account holder filed a claim of exemption, the bank should release only the amount that belongs to the person with the tax debt. However, banks do not always get this right. Some banks release everything to the IRS and make the non-debtor owner fight to get their money back later.

The non-debtor account holder should contact the bank immediately after learning about the levy and ask for the bank's procedure for filing a claim of exemption. This claim must be in writing and must state that the money in the account belongs to the non-debtor, not to the person who owes the IRS. Keep a copy of everything you send to the bank.

Injured spouse relief if you file taxes jointly

Injured spouse relief is a different process from protecting a joint bank account. It applies when you are married, file a joint tax return, and the IRS uses your refund to pay your spouse's tax debt. It does not directly protect a joint bank account from levy.

However, if the IRS has levied your joint bank account because your spouse owes back taxes, you may be able to recover your share of the money through injured spouse relief. This requires filing Form 8379 with the IRS, usually within three years of when the IRS took the money. The IRS will then determine how much of the account balance belonged to you and send you a refund for that portion.

Injured spouse relief is slow — it can take several months or longer — and it only works if you can show that you had no part in creating the tax debt. If you both signed the tax return and both benefited from the income that created the debt, injured spouse relief may not help you.

What notice you receive before a levy happens

The IRS must send you a Notice of Intent to Levy at least 30 days before it can levy your bank account. This notice tells you the amount owed, the reason for the debt, and your right to request a hearing. If you receive this notice, you have options: you can pay the debt in full, set up a payment plan, or request a hearing to challenge the levy.

The notice also tells you that you have the right to request a Collection Due Process hearing. At this hearing, you can argue that the levy is improper, that you have a hardship, or that you want to work out a payment plan instead. Requesting a hearing does not stop the levy automatically, but it does give you a chance to be heard before the IRS takes action.

If you do not receive the notice, or if you receive it but miss the deadline to respond, the IRS can still proceed with the levy. However, you may still have options after the levy occurs, such as filing a claim for return of funds or requesting a Collection Due Process hearing after the fact.

Steps to take if your joint account has been levied

If you discover that your joint bank account has been levied, act quickly. First, contact your bank and ask for the exact date the levy was received and the amount frozen. Ask the bank for its procedure to file a claim of exemption if you are the non-debtor account holder. The bank should provide you with a form or instructions.

Second, gather evidence that the money in the account belongs to you, not to the person who owes the IRS. This might include bank statements showing deposits from your paycheck, documentation of gifts or inheritances, or records of separate property. Write a clear statement explaining which funds are yours and submit it to the bank along with your claim of exemption.

Third, contact the IRS directly at the phone number on the levy notice. Ask whether the IRS will release the funds that belong to the non-debtor. Some IRS offices will do this if you provide proof of ownership. If the IRS refuses, you may need to file a claim for return of funds with the IRS, which requires submitting Form 668-D and supporting documents.

When the IRS can take the entire account even if it is joint

In some cases, the IRS can take the entire balance of a joint account, even though only one person owes the tax. This happens most often when spouses file a joint tax return and both are liable for the tax debt. If both spouses signed the return and both benefited from the income, the IRS may treat both as responsible for the debt.

Additionally, if the non-debtor account holder has a history of transferring money to the debtor or has been using the account to pay the debtor's bills, the IRS may argue that the funds are not truly separate property. This is why documentation matters: keep records showing that your deposits are your own income and that your withdrawals are for your own expenses.

If you believe the IRS has wrongfully taken money that belongs to you, you can file a claim for return of funds within one year of the levy. This claim must be submitted in writing to the IRS office that issued the levy, and it must include evidence that the money was yours alone.

Alternatives to a levy and how to stop one before it happens

If you owe back taxes, you have options that may prevent a levy altogether. The IRS offers payment plans, called installment agreements, that allow you to pay the debt over time. You can request a plan by calling the IRS or submitting Form 9465. If you are approved, the IRS will not levy your account while the plan is in effect, as long as you make your payments on time.

You can also request an Offer in Compromise, which is a settlement with the IRS for less than the full amount owed. This is difficult to obtain and requires detailed financial information, but it can stop collection action if the IRS accepts your offer.

If you are experiencing financial hardship, you can request that the IRS place your account in Currently Not Collectible status. This temporarily stops collection action, including levies, while you work to improve your financial situation. You must reapply periodically to keep this status active.

Frequently Asked Questions

Can the IRS levy a joint account if only one spouse owes taxes?

Yes, the IRS can levy the account, but it should only take the portion that belongs to the spouse who owes the debt. The other spouse must file a claim of exemption with the bank within 21 days to protect their share. If the bank releases all the money to the IRS, the non-debtor spouse can file a claim for return of funds or request injured spouse relief.

What happens if I file a claim of exemption but the bank ignores it?

If the bank releases all the money to the IRS despite your claim of exemption, you can file a claim for return of funds directly with the IRS. Submit Form 668-D and supporting documents to the IRS office that issued the levy. You have one year from the date of the levy to file this claim.

Does a payment plan stop the IRS from levying my bank account?

Yes, if you have an approved installment agreement with the IRS, the IRS will not levy your account as long as you make your payments on time. However, if you miss a payment, the IRS may resume collection action, including levies.

Can I get my money back after the IRS has already taken it from my joint account?

Yes, but it depends on whether the money was yours. If you can prove that the funds belonged to you and not to the person who owes the tax, you can file a claim for return of funds with the IRS within one year of the levy. If you are married and filed jointly, you can also file Form 8379 for injured spouse relief.

How long does it take to recover money after filing a claim of exemption?

The bank should release your share of the money within 21 days of receiving your claim of exemption. However, some banks take longer. If the bank does not release the money within a reasonable time, contact the bank again and ask for the status of your claim. If the bank refuses to release the money, you will need to file a claim with the IRS.