The money is left on deposit during the holding period. On the day the money is being sent, the depositor closes the account. Some banks have rules that they will not pay interest to depositors during holding periods for levies. Both of these are changing the terms of the account because of the levy. These are not grounds for avoiding interest on levy proceeds.
Many banks charge their customers a fee for processing levies.
The bank is not entitled to reduce the levy proceeds to collect the fee. Crediting Levy Payments 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.