Most of the work on a wage levy is about stopping the next paycheck. But people reasonably ask: what about the money the IRS already took? In some situations, the law allows it to come back. The rules are narrower than for stopping the levy, and there is a deadline.
The authority: IRC 6343(d)
IRC 6343(d) says that if property has been levied and the IRS determines that:
- the levy was premature or otherwise not in accordance with IRS administrative procedures,
- the taxpayer has entered into an installment agreement for the liability, unless the agreement provides otherwise,
- returning the property will facilitate collection, or
- with the consent of the taxpayer or the National Taxpayer Advocate, returning the property would be in the best interests of the taxpayer and the United States,
then the IRS may return the property as if it had been wrongfully levied, except that no interest is allowed.
Levies that violated the law
IRM 5.11.2.4.1 separates levies that violated the law from those where return is discretionary. It says erroneous levy proceeds will be returned if the levy is in violation of the law, citing Treasury Regulation 301.6343-3(d), and gives two examples: a levy made without giving the taxpayer notice of the right to a hearing under IRC 6330, and a levy made while an offer in compromise is pending in violation of IRC 6331(k)(1). Those proceeds must be returned, subject to the time limit for requesting return.
The IRM also notes a limit on what counts. A trivial procedural error may not justify return. Its example involves a levy mailed to the wrong address at a company that forwarded it to the right department; the IRS may determine the error is trivial and returning the payment is unwarranted.
Discretionary returns
After an installment agreement
IRM 5.11.2.4.1 gives an example: after a levy, the taxpayer enters into an installment agreement that will fully pay the liability, and the revenue officer verifies the taxpayer can meet the terms. An amount equal to the money levied may be returned.
Economic hardship from the start
The IRM also describes a case where a financial statement establishes that the levy created an economic hardship from the time it was first issued. The IRS releases the levy and may return an amount equal to what was levied. The IRM says it will generally be in the government’s best interest to return such payments when the levy created a hardship. The exception: it is generally not in the government’s interest to return levy proceeds received before the taxpayer asked for release if the taxpayer did not respond to IRS contact attempts before the levy and has no reasonable cause for not responding.
That exception is a lesson in itself. People who engage early get more flexibility than people who ignore notices. See economic hardship release.
The deadline: two years
IRC 6343(b) says an amount equal to money levied may be returned at any time before the expiration of 2 years from the date of the levy, and IRM 5.11.2.4.1 says that extended period applies to erroneous levies under IRC 6343(d) as well. For levies on or after March 23, 2017, the request must be made before two years from the date of levy.
For a continuous wage levy, think carefully about dates. Money from each paycheck was received at a different time, and the IRM measures from the date of levy. Do not wait. If you think you have a return claim, make it in writing as soon as possible.
IRM 5.11.2.4.1 adds that the IRS can return levy proceeds without a request if the period has not expired, and may investigate an oral request, but should advise the taxpayer that a written request is required within the statutory time period under Treasury Regulation 301.6343-3(h).
How to ask
IRM 5.11.2.3.2.3 refers taxpayers making an administrative claim for return of property under IRC 6343(d) to Pub 5149, Making an Administrative Return of Property Claim Under Internal Revenue Code (IRC) Section 6343(d). Practical steps:
- Identify the levy, the tax periods and the dates and amounts taken.
- State the ground: improper procedure, installment agreement, hardship, facilitates collection, or best interests.
- Attach support: the missing CDP notice issue, the offer acceptance letter showing the pending date, the installment agreement, or your financial statement.
- Send it in writing within the two-year period and keep proof of mailing.
If the claim is denied, IRM 5.1.9.4 lists disallowance of a taxpayer’s request to return levied property under IRC 6343(d) among the actions that can be appealed under the Collection Appeals Program.
No interest, usually
IRC 6343(d) says the return is made as if the property had been wrongfully levied “except that no interest shall be allowed.” Expect to get back what was taken, without interest, in the ordinary erroneous levy case.
Bigger problems: civil damages
If an IRS employee recklessly, intentionally or negligently disregarded the Code or regulations in collecting from you, IRC 7433 allows a civil action for damages in district court. Damages are capped at the lesser of $1,000,000, or $100,000 for negligence, and actual direct economic damages plus costs. You must exhaust administrative remedies first, and the action must be brought within two years after the right of action accrues. That is a lawsuit, not a phone call, and it is rare. It exists.
An example
Paula moved in 2025 and filed her return from the new address, so her last known address changed. The IRS later mailed a CDP notice for an older year to her former address, and a wage levy for that year followed. If the IRS did not send the required notice under IRC 6330 to her last known address, that levy was issued without the notice the statute requires, which is the very example IRM 5.11.2.4.1 gives of a levy in violation of law.
Paula requests a release immediately, then submits a written claim for return of the amounts levied for that year, with a copy of the return she filed from her new address before the notice was mailed. Because a levy in violation of law falls in the category where proceeds will be returned, subject to the two-year limit, her claim has a strong footing. She gets no interest on the return under IRC 6343(d), but she gets the money back.
Compare her coworker, whose levy followed proper notices that he ignored. His path to a return is the discretionary one, and the IRM warns that ignoring contact attempts without reasonable cause weighs against returning proceeds received before he asked for release.
Keep the release and the return separate
A request to return money already taken should never slow down a request to stop the next paycheck. Ask for the release first, under the ground that fits. See how to stop a wage garnishment. Then pursue the return.
Stopping the levy saves the next paycheck. Asking for a return might save the last few. Do both, and mind the two-year clock.