Answer #1: The levy only reaches the good funds in the account on the day the levy is served on the bank. The 21 day "hold" period is only to provide the taxpayer with an appear period before you send the funds to the bottomless pits of the IRS.
Answer #2: IMHO, you don't touch a customer's account for an IRS levy unless you have a firm hit. If the SSN/EIN doesn't match, and the address doesn't match, I believe you respond "no funds." But keep a copy of what you used to make your decision. If you get a match on name and address, but not on TIN, I'd suggest calling the IRS and state your case and await guidance.
John S. Burnett
Fighting for Compliance since 1976
Bankers' Threads User #8