IRS Form 668-D: A Guide To Releasing A Tax Levy

Receiving notice of a tax levy from the IRS can be one of the most stressful experiences for any taxpayer. A levy allows the IRS to seize wages, bank accounts, and other assets to satisfy a tax debt. However, when a resolution is reached or the debt is otherwise satisfied, the IRS uses Form 668-D to notify parties of the release.

This form, officially titled “IRS Form 668 D Release of Levy,” plays a critical role in stopping ongoing collection actions and restoring access to levied assets. If you’re navigating the complexities of an IRS levy release form, understanding how this process works can help you protect your financial future.

What Is IRS Form 668-D?

IRS Form 668-D is an official document issued by the Internal Revenue Service to inform third parties that a tax levy has been released. If your wages, bank account, or other property were previously subject to a levy, this form serves as written confirmation that the IRS no longer has a claim on those assets. The IRS may send Form 668-D to an employer, a bank, or any other institution that was instructed to comply with a previous levy.

While it may appear as just another piece of IRS correspondence, this document is powerful. The moment it is received and processed by the levied party, such as your bank or employer, the levy officially terminates and restores the taxpayer’s right to their income or property.

Why the IRS Issues Form 668-D

The IRS does not issue a tax levy release lightly. Form 668-D is sent only under specific conditions. The most common reason is that the taxpayer has satisfied the debt, either through full payment or through a settlement agreement, such as an Offer in Compromise. In other situations, the IRS may release the levy if it has determined that the levy is causing financial hardship or if the collection statute has expired.

Another reason for issuing Form 668-D could be procedural. If a levy was initiated in error, for example, if the IRS levied someone who is not liable for the tax, it must be lifted immediately. This form communicates that correction to all involved parties.

Whether the release results from successful negotiation or the resolution of an error, IRS Form 668-D serves as your official notice of relief from levy action.

What a Tax Levy Release Means for You

A tax levy release changes everything for a taxpayer. Once IRS Form 668-D is in effect, the frozen bank funds are released, wage garnishments stop, and the IRS no longer seizes assets tied to the original levy. In short, it marks the end of one of the most intrusive enforcement actions the IRS can take.

However, it’s important to note that a levy release does not necessarily mean the entire tax issue is resolved. In some cases, the levy is released temporarily, perhaps because the taxpayer has entered into a payment plan or proven temporary hardship. In other cases, the release is permanent, especially if the underlying liability has been fully paid or compromised.

This is why understanding the context of your IRS levy release form is so important. It helps you determine whether further compliance steps are needed to avoid future levies or IRS action.

How Form 668-D Is Delivered

The IRS generally sends Form 668-D directly to the third party that was responsible for executing the original levy. For wage garnishments, the form is sent to your employer. For bank levies, the amount is deducted from your financial institution. A copy may also be sent to you, the taxpayer, but it’s not always guaranteed.

The form includes the taxpayer’s identifying information, a description of the levy being released, and instructions to the receiving party that they are no longer required to withhold or remit funds. Once received, employers must stop wage garnishments immediately, and banks should release any funds that were being held unless already turned over to the IRS.

Delays in processing can occur if the receiving party is unfamiliar with the form or slow to act. In such cases, it’s advisable to follow up with your employer or bank to ensure they’ve processed the IRS levy release form correctly and promptly.

What To Do After Receiving IRS Form 668-D

Receiving Form 668-D is often a relief, but it doesn’t mean your responsibilities are over. If the release was the result of a payment plan or other conditional agreement, you must continue to comply fully with those terms to prevent a new levy from being issued.

If you believe your bank or employer has not acted on the form, it’s critical to contact them directly and provide a copy of the document if necessary. You should also retain a copy of the form for your records in case of future disputes or confusion.

In cases where the form was issued due to full satisfaction of debt, it is advisable to request a formal IRS transcript or confirmation letter that confirms your account is in good standing. This will give you peace of mind and official documentation that the debt has been resolved.

Common Misunderstandings About IRS Levy Release

Many taxpayers mistakenly assume that receiving IRS Form 668-D wipes away the tax debt completely. However, this is only true in cases where the debt has been fully satisfied, settled through an Offer in Compromise, or dismissed due to the expiration of the statute of limitations. In other situations, the IRS may still consider the debt active and could reinstate collection action if the taxpayer fails to remain compliant.

Another misunderstanding involves timing. Taxpayers often believe that the release takes effect the moment the IRS decides to lift the levy. In reality, the release is not official until the receiving institution receives and processes IRS Form 668-D. That means delays in mail delivery or internal handling by the bank or employer can lead to continued garnishment or frozen funds, even after the IRS has approved the release.

Finally, taxpayers sometimes assume that IRS levy release forms are automatic once they enter into a resolution. While IRS systems may be improving, it’s not uncommon for taxpayers to need to follow up and ensure the release has been issued and delivered.

What If You Haven’t Received IRS Form 668-D Yet?

If you believe you’ve resolved your tax issue but haven’t received Form 668-D, don’t wait passively. Contact the IRS and request confirmation that the levy has been released. If you’re represented by a tax professional, they can initiate the inquiry on your behalf and even request expedited release in cases of financial hardship or administrative error.

Delays can also occur if the IRS has outdated contact information or is experiencing a backlog in processing. If your financial institution or employer is still withholding funds, provide them with proof of the resolution and request that they contact the IRS directly to confirm that a levy release is pending.

Acting quickly can prevent further financial strain and help ensure the levy is lifted as soon as possible.

Preventing Future Levies

Once a levy is released, the goal should be to avoid falling into the same situation again. This means staying current with tax filings and payments, communicating with the IRS when you anticipate trouble, and honoring any agreements you’ve made to resolve past debts.

The IRS is far more likely to work with taxpayers who show good faith and a willingness to comply. Even if you’re still carrying tax debt after a levy is released, proactive communication and ongoing compliance can prevent future enforcement.

In cases of financial hardship, consider requesting Currently Not Collectible status or modifying your payment agreement. These measures can keep the IRS at bay while giving you time to improve your financial situation.