A bank must wait 21 calendar days after a levy is served before sending payment. Then, on the next business day, it must turn over the taxpayer's money. The depositor(s) can waive this waiting period. The bank will not send money that is subject to attachment or execution under judicial process. "Bank" includes credit unions, savings and loan associations, trust companies, and others described in IRC 408(n).

During the holding period, a levy might be released, or the amount owed could decrease.

Consider the holding period before deciding how long to project the accruals on a bank levy.

The holding period was created to settle disputes about ownership of bank accounts before money is sent.

Assign a bank liaison in each territory to settle these issues quickly.

Sometimes, ownership is not settled before the holding period ends. If this happens, ask the bank for more time.

The bank must send the amount in the taxpayer's accounts. However, it must send no more than the amount shown on the notice of levy.

The notice of levy only reaches the amount on deposit when the levy is received. Money deposited later is not surrendered, including deposits during the holding period. Another levy must be served to reach this money. Also, the levy only reaches deposits that have cleared and are available for the taxpayer to withdraw.

Credit the levy payment on the date it is received.

Credit the money in the most advantageous way to the government. Generally, apply the money to the oldest assessment, first. The taxpayer can not designate how the money is applied, because this is not a voluntary payment.

Use designated payment code (DPC) 05 for levy payments. Use DPC 15 for other payments caused by a levy, if they are not levy proceeds.

Part of taxpayer's income is exempt from levy. See 5.4. Once income is deposited in a bank, there is no exempt amount. On the other hand, unlike a levy on wages and salary, a bank levy does not continue to reach the taxpayer's money.

When an entire paycheck is deposited, however, a hardship may exist because all of the money is levied. If this happens, release the levy in whole or in part to avoid creating hardship.

Banks generally require a portion of property taxes and insurance to be paid with each mortgage payment. This is held in escrow until the tax and insurance are paid. As long as the taxpayer can not withdraw money in these accounts, a levy can not reach it.

Sometimes, though, the account is overpaid. The taxpayer may have the option to get this refunded. A levy can reach this.

Also, when property is sold, there may be escrow money that will be refunded to the taxpayer. A levy can reach this, too.

Bank accounts may be levied to collect taxes that colleges, universities, and other schools owe. These schools' accounts may include money belonging to the Department of Education (ED). ED gives money to some schools for student aid. This is not the school's money.

The bank might honor the levy. If it does, process the payment.

The bank might not honor the levy because of ED funds in the account.

A bank might not honor a levy on a school official because of ED's interest in an account. Handle this as in (3).

Policy Statement P–5–39 says taxpayers will be reimbursed for bank charges caused by erroneous levies.

Reimburse the taxpayer for fees the bank charged for