Tax Problems
IRS Tax Levy
Dealing with tax debt can be stressful, and if left unresolved, the IRS has the authority to take serious collection actions. A tax levy allows the IRS to seize your property — including wages, bank accounts, and even real estate — to satisfy unpaid tax debt.
Key Insights
What Is a Tax Levy?
A tax levy is a legal seizure of your assets or property to repay an unpaid tax liability. Unlike traditional collection agencies that require a court order, the IRS can authorize levies to collect delinquent tax balances on its own authority. Any property or asset can be levied to fulfill an unpaid tax debt — including your house, vehicles, bank accounts, wages, retirement accounts, rental income, accounts receivable, the cash loan value of a life insurance policy, and any other asset.
How Is a Tax Lien Different From a Tax Levy?
Tax Lien
A legal claim against your property when a tax debt remains unpaid. Protects the government's interest in your assets. Does not involve taking your property — it simply establishes the IRS's right to it.
Tax Levy
The actual seizure of property to satisfy the tax debt. Allows the IRS to take funds from your bank account, garnish wages, or seize and sell assets like real estate or vehicles.
What Property Is Exempt From a Tax Levy?
Federal law protects certain essential assets to ensure you can maintain basic living standards. Some key items exempt from a tax levy include:
- Essential clothing
- Household furniture and appliances
- School books
- Necessary tools for your trade or profession
- Unemployment benefits
- Certain annuity and pension payments
- Judgments granting child support for minor children
When Will the IRS Issue a Levy?
For the IRS to issue a levy, three requirements must be satisfied:
- 1The IRS sent you at least one Notice and Demand for Payment
- 2The taxpayer has neglected or refused to pay the tax bill
- 3The IRS sends a Final Notice of Intent to Levy and Notice of Your Right to a Hearing (LT11 or LT1058) with a 30-day deadline
The IRS may notify you in person, by leaving notice at your home or workplace, or by certified mail to your last known address. You may also receive notices like CP504, CP504B, or CP90.
Beware of Tax Levy Scams
The IRS will not send you an intent to levy via phone call, email, or SMS message. If you receive notice that the IRS is threatening to place a levy on your assets through any of these mediums, it is most likely a scam or IRS impersonation. Report it to the FTC immediately.
How to Remove a Tax Levy
Pay the Balance in Full
The fastest way to remove a tax levy. Once your tax bill is fully paid, the IRS will release the levy.
The Collection Period Has Ended
If the 10-year statute of limitations on collection expired before the IRS issued the levy, the levy can be released.
Enter a Fresh Start Program
Entering into a qualifying Fresh Start Initiative program — such as an Installment Agreement or Offer in Compromise — and meeting its terms can lead to levy release.
Demonstrate Economic Hardship
If the levy creates an economic hardship that prevents you from meeting basic living expenses, you can apply to have it removed and seek other tax relief solutions.
Appeal the Levy
If you believe the IRS issued a levy in error, you have the right to appeal. A tax professional is highly recommended for the best possible outcome, as the IRS's ability to release a levy is at its discretion.
Frequently Asked Questions
Stop an IRS Tax Levy Before It's Too Late
The sooner you address your tax liability, the more options you'll have. Schedule a free consultation today.
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