Situation: Virginia resident, Kentucky checking account. Notice of Tax Lien Levy is received from the Commonwealth of Virginia. As a bank that only operates in Kentucky, are we subject to the jurisdiction of a court from Virginia? It is my understanding that without "domestication" or a "reciprocal" arrangement, we may not be subject to this lien. Any sources and/or recommendations would be appreciated. Thanks!

You need to talk to your bank's attorney. Depending on the letter, they will decide if you need to process or they can give you a letter to send stating the need for KY laws to be followed.

Your understanding is correct, but you need to get your attorney to confirm it and tell you how to respond.