Section 6332 governs the third party who receives a levy, not only the taxpayer. It explains why banks freeze funds, employers remit nonexempt wages, and account debtors may redirect payments to the IRS.
What the authority does
A person in possession of, or obligated with respect to, property subject to levy generally must surrender it on demand, subject to statutory exceptions. The section includes a 21-day rule for banks and potential liability for failure to surrender without reasonable cause.
Why it matters in a tax controversy
The recipient should identify what property or obligation existed when the levy was served and avoid making its own determination about the taxpayer's liability. The taxpayer or counsel uses the holding period or payment cycle to pursue release, establish ownership, raise hardship, or identify procedural restrictions.
What it does not answer by itself
The duty to honor a levy does not mean every item demanded is actually property of the taxpayer or legally reachable. Possession, obligation, attachment, exemptions, prior judicial process, and release all require case-specific review.
Research and case checkpoints
- Preserve the levy and record the exact date and method of service.
- Identify the property or obligation held when the levy attached.
- Determine whether the recipient has a statutory defense or competing judicial process.
- Seek any release before the applicable remittance date rather than after funds are paid.
Primary and official sources
Currency note: Check the current text, amendment history, effective date, and the version governing the tax period or agency action before relying on this summary.