Releasing IRS and California State Tax Wage & Bank Levies — How Mike Habib, EA, Helps Protect Taxpayers’ Income and Assets

When your paycheck or bank account is suddenly seized by the IRS or a California state tax agency like the Franchise Tax Board (FTB), Employment Development Department (EDD), or California Department of Tax and Fee Administration (CDTFA), the experience can feel devastating. You work hard to make a living — only to find your income or savings frozen or taken without warning.

This situation can cause tremendous financial stress. But the good news is: you have rights, and there are effective ways to stop, release, and resolve wage and bank levies.

I’m Mike Habib, EA, an Enrolled Agent licensed by the U.S. Treasury, based in Los Angeles, California, representing individuals and businesses before the IRS and state tax agencies nationwide. For over 20 years, I’ve helped taxpayers successfully release levies, negotiate payment arrangements, stop garnishments, and protect their livelihoods.

This detailed FAQ-style guide explains how IRS and California state wage and bank levies work, what your options are, and how my firm can help you secure relief and financial peace of mind.

FAQ 1: What Is an IRS or State Wage Levy?

A wage levy (also called a wage garnishment) is a legal action by the IRS or a state tax agency that directs your employer to send part of your paycheck directly to the government instead of to you.

Once a levy is in place, a large portion of your take-home pay is diverted — often leaving just enough for basic living expenses. The amount exempted is based on your filing status and number of dependents, and in many cases, the IRS or state agency will take more than half of your net income.

This can be crippling — rent or mortgage payments fall behind, credit cards default, and day-to-day living becomes stressful.

At my Los Angeles-based tax firm, I’ve represented hundreds of clients who woke up one morning to find their paycheck unexpectedly slashed or their bank account frozen. The key takeaway is that a wage levy does not happen randomly — it follows a series of IRS or state notices that can be managed and stopped with timely professional help.

FAQ 2: How Is a Bank Levy Different From a Wage Levy?

While a wage levy targets your paycheck, a bank levy targets your money that’s already been deposited in a checking or savings account.

When the IRS or a state agency issues a Notice of Levy to your bank, the bank must freeze your account immediately — up to the amount of tax owed — and hold the funds for 21 days (federally) before sending them to the government.

This 21-day period exists to give you time to resolve the issue or negotiate a release before the money is transferred. Once the levy is finalized, the funds are gone — and often, bounced checks and overdraft fees add insult to injury.

For state levies (such as FTB or CDTFA), the waiting period may be shorter or nonexistent. In California, state agencies can use the Franchise Tax Board’s continuous order to withhold, which allows them to seize funds from your bank account or wages until the full balance is paid.

If you’ve been hit with a bank levy, time is of the essence. I regularly help clients in Los Angeles and across the U.S. use this short window to negotiate with the IRS or state to release or modify the levy — before it wipes out their funds.

FAQ 3: Why Did I Receive a Levy in the First Place?

The IRS and California tax authorities don’t issue levies without notice. A levy usually comes after multiple letters and opportunities to resolve the back tax debt voluntarily.

Here’s the typical sequence:

1. Balance Due Notice (CP14) – The IRS informs you of an unpaid tax.
2. Final Notice of Intent to Levy (LT11 or CP90) – This is your last warning before enforced collection.
3. Right to a Collection Due Process (CDP) Hearing – You have 30 days to request an appeal or resolution.
4. Levy Issued – If there’s no response, the IRS proceeds with a wage or bank levy.

The same process applies to California agencies. The FTB, EDD, and CDTFA will send multiple notices before taking enforcement action. But if those notices are ignored — or mailed to an old address — a levy can still be triggered.

If you never received those notices, you may have strong grounds to challenge or reverse the levy. My firm specializes in proving notice defects and procedural violations that can lead to a levy release and account restoration.

FAQ 4: What Are My Rights When the IRS or State Levies My Income or Assets?

You have important legal rights under federal and California tax laws.

Under Internal Revenue Code Section 6343, the IRS must release a levy if:

• The tax has been paid in full or is no longer collectible,
• Releasing the levy helps facilitate collection,
• You’ve entered into a valid installment agreement,
• The levy causes economic hardship, or
• The property’s value exceeds the amount owed and can be partially released.

For state tax agencies (FTB, EDD, CDTFA), similar standards apply — particularly where a levy causes undue financial hardship.

In practice, I’ve used these rules countless times to help clients stop levies within days — by demonstrating hardship, negotiating installment agreements, or arranging “currently not collectible” status.

You don’t need to face the IRS or state alone. A licensed Enrolled Agent like me has the legal authority to communicate, negotiate, and advocate directly with the IRS and state tax offices on your behalf.

FAQ 5: What Does “Economic Hardship” Mean?

Economic hardship means the levy is causing you to be unable to meet your basic living expenses — such as rent, mortgage, utilities, food, transportation, or medical needs.

In these cases, the IRS or state is required to lift or modify the levy. To prove hardship, we prepare a financial statement (IRS Form 433-A or 433-F) that documents your income, expenses, debts, and family situation.

Real-world example:

John, a self-employed contractor in Los Angeles, had his bank account frozen by the IRS for $18,000 in unpaid self-employment taxes. He couldn’t pay rent or buy materials for work. We quickly gathered his financials, proved that the levy would create severe hardship, and within five days, the IRS released the bank levy and placed his account in “currently not collectible” status. John kept his business running and avoided bankruptcy.

Each case is unique, but the goal is the same: protect your livelihood while negotiating a sustainable solution with the taxing authorities.

FAQ 6: How Can I Prevent a Levy in the First Place?

The best way to avoid a levy is to take action early — ideally, before the IRS or state issues the Final Notice of Intent to Levy.

Here’s what you can do:

1. Respond to every tax notice — even if you can’t pay. Ignoring notices triggers enforcement.
2. File Form 9465 (Installment Agreement Request) with your tax return or soon after.
3. Contact a professional immediately if you receive a Final Notice (CP90, LT11, or FTB Demand to Withhold).
4. Demonstrate cooperation — The IRS is far less likely to levy if you’re actively resolving your case.

As an experienced tax representative, I help clients establish installment agreements, hardship status, or Offers in Compromise before levies are ever issued. Acting early keeps you in control and avoids the financial shock of a sudden seizure.

FAQ 7: What Happens Once a Levy Is in Place?

Once a wage levy begins, it continues until:

• The full balance is paid,
• The IRS or state agrees to release it,
• The taxpayer proves hardship, or
• The underlying tax debt becomes uncollectible by law (statute expiration).

For bank levies, the bank holds the funds for 21 days (IRS) or shorter for state levies. During this time, you can request a levy release or partial release if the seizure causes hardship or jeopardizes your job or business.

Example:

A Los Angeles nurse came to me after receiving an IRS wage levy that took nearly 60% of her pay. She was behind on rent and facing eviction. We immediately contacted the IRS Collections department, filed a hardship appeal, and within 72 hours, her employer received a levy release order. We then set up a reasonable monthly installment plan to keep her account in good standing.

Acting fast matters — with experienced representation, levies can often be released within days, not weeks.

FAQ 8: How Can Mike Habib, EA, Help Me Release a Levy?

At my firm, every case begins with a thorough review of your IRS or state account transcripts, financial condition, and the legality of the levy itself. Then, we build a customized plan to stop and resolve the issue.

Here’s how we typically help clients:

1. Immediate Contact with the IRS or State Agency – We act quickly to request a levy release, often within 24–48 hours.
2. Financial Hardship Documentation – We prepare IRS Form 433-A/F or state financial statements to prove your inability to pay.
3. Installment Agreement or Offer in Compromise – We negotiate realistic payment terms or a settlement that fits your budget.
4. Hardship or Currently Not Collectible Status – For clients with low income or financial strain, we secure full suspension of collection.
5. Communication Management – We handle all correspondence and calls, shielding you from IRS or state pressure.
6. Long-Term Resolution – We ensure future compliance to prevent new levies or liens.

Clients often say they finally sleep better knowing they no longer have to deal with aggressive IRS or state collection officers.

FAQ 9: What About California Agencies Like FTB, EDD, and CDTFA?

California’s state tax agencies can be just as aggressive — sometimes even more so — than the IRS.

• FTB (Franchise Tax Board) handles personal income and business taxes. It can issue continuous wage orders that remain active until the debt is paid in full.
• EDD (Employment Development Department) enforces payroll tax collections and can levy bank accounts and wages of business owners.
• CDTFA (California Department of Tax and Fee Administration) oversees sales and use taxes and can seize funds without prior court approval.

Example:

A restaurant owner in Pasadena had both an IRS levy and a CDTFA bank levy for unpaid payroll and sales taxes. We intervened immediately, negotiated with both agencies, and secured a coordinated payment plan that released both levies and kept his business open.

My firm regularly represents clients before these California tax agencies, using the same federal principles — hardship, installment plans, and negotiated settlements — to stop enforcement and protect assets.

FAQ 10: What Is the Difference Between a Levy and a Lien?

Many taxpayers confuse liens and levies, but they’re very different.

• A lien is a claim the IRS or state files against your property (home, car, business assets) to secure its interest in your tax debt. It doesn’t take your money immediately but damages your credit and restricts property sales.
• A levy, on the other hand, is the actual seizure of money or assets — such as taking funds from your bank or wages.

You can have both a lien and a levy at the same time. The lien protects the government’s claim; the levy enforces it.

Even while an installment agreement is in place, the IRS may still file a lien. But a properly negotiated agreement prevents active levies — which is where professional representation becomes critical.

FAQ 11: Can a Levy Be Released After Payment Arrangements Are Made?

Yes — under IRC §6343(a)(1)(C), once a taxpayer enters into an approved installment agreement, the IRS must release any active levy (unless the agreement specifically provides otherwise).

The same holds true for California agencies. If you’re in good standing with your payment plan, your employer or bank should no longer be subject to active garnishment.

As your representative, I make sure the IRS or state immediately processes levy releases after agreements are approved — avoiding delays that could cost you another paycheck or bank balance.

FAQ 12: What if I Truly Can’t Pay Anything?

If you can’t afford to make even small payments, you may qualify for “Currently Not Collectible (CNC)” status.

When your financial statement proves that any payment would cause hardship, the IRS and California agencies can temporarily suspend all collection activity, including levies.

During CNC status:

• Levies are lifted,
• No new enforcement actions occur, and
• You gain breathing room to rebuild financially.

However, interest continues to accrue, and you must remain compliant on future tax filings. My firm helps clients manage this status strategically while exploring longer-term resolutions such as an Offer in Compromise or bankruptcy discharge (when applicable).

FAQ 13: What Happens if I Ignore a Levy?

Ignoring a levy rarely makes it disappear — it usually makes things worse. Once the IRS or state realizes you’re unresponsive, they can escalate by:

• Filing federal or state tax liens,
• Intercepting future refunds,
• Seizing additional accounts or property, or
• Referring your case to private collection agencies.

Unresolved levies can also damage credit, jeopardize employment, and trigger stress that spills into personal and professional life.

Prompt, professional representation is the fastest way to restore control and prevent escalation.

FAQ 14: Why Choose Mike Habib, EA, for Levy Release and Tax Relief?

When facing a wage or bank levy, experience matters. I’ve spent over two decades helping individuals and businesses resolve their toughest tax problems — with the IRS, FTB, EDD, and CDTFA.

Here’s why clients trust my firm:

✅ Experience: 20+ years specializing exclusively in IRS and California tax representation.
✅ Expertise: Licensed Enrolled Agent, authorized by the U.S. Treasury to represent taxpayers in all 50 states.
✅ Authoritativeness: Featured in major media, 5-star reviewed, and BBB A+ Accredited since 2007.
✅ Trustworthiness: Direct representation — clients always deal with me personally, not call centers or unlicensed staff.

My mission is simple: to protect your income, assets, and peace of mind by resolving your tax issues efficiently and ethically.

FAQ 15: How Quickly Can a Levy Be Released?

In many cases, levies can be released within 24 to 72 hours after intervention.

Timing depends on:

• The type of levy (wage vs. bank),
• Whether the IRS or state has all required financial documents, and
• How promptly your representative acts.

At my firm, we prioritize emergency levy release cases, often contacting the IRS or state collections division the same day. For bank levies, acting within the 21-day holding window is critical to recovering funds.

FAQ 16: What Should I Do Right Now if I’m Facing a Levy?

If your paycheck or bank account is being levied:

1. Do not ignore it. Time is critical.
2. Do not call the IRS or FTB alone. Anything you say can affect your options.
3. Contact a licensed professional immediately. Representation can stop enforcement fast.
4. Gather financial records — pay stubs, bank statements, and prior notices.
5. Stay compliant — file all missing tax returns to maintain negotiation eligibility.

As your representative, I’ll take over communication, determine the best legal route, and move quickly to secure a release — while protecting your future earnings and assets.

Conclusion: Regain Control and Protect Your Finances

A wage or bank levy feels like a crisis — but it’s one that can be resolved with experience, strategy, and prompt action.

Whether the levy comes from the IRS, FTB, EDD, or CDTFA, there are legal pathways to release it, prevent future enforcement, and negotiate lasting solutions.

I’ve helped countless clients in Los Angeles, across California, and nationwide restore their paychecks, release frozen accounts, and rebuild financial stability. You deserve the same peace of mind.

Contact Mike Habib, EA, Today

If your paycheck or bank account is being levied — or you’ve received a Final Notice of Intent to Levy — don’t wait another day.

Based in Los Angeles, CA, serving clients nationwide and overseas.
Call (877) 78-TAXES [877-788-2937]
Visit: www.myirstaxrelief.com

Let’s stop the levy, protect your income, and resolve your tax problem once and for all — professionally, confidentially, and effectively.