Understanding the Notice of Levy from the IRS

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A notice of levy from the IRS is one of the most disturbing pieces of mail, often triggering stress and fear. It’s a signal that the IRS is about to seize your property, wages, or even personal belongings to settle unpaid tax debt.  

But you’re not alone. Every year, thousands of American taxpayers receive notices of levy from the IRS without realizing they have multiple options. 

In this guide, we’ll walk you through everything you need to know about levy enforcement, including how it happens, how you can protect yourself, and what actions you can take to prevent further damage.

What is a Notice of Levy From the IRS?

A notice of levy from the IRS is a legal notice that warns taxpayers about the seizure of their bank accounts, personal belongings, or even wages to collect owed taxes. 

Let’s look into the types of tax levies imposed by the IRS to recover taxes.

• Property/estate tax levy: A property tax levy happens when you don’t pay your property taxes, which are based on the value of your home or land. Local governments use this money to pay for public services like schools and roads. An estate tax levy happens after someone’s death. It takes a portion of their estate (the things they own).
• Income tax levy: An income tax levy happens when you don’t pay your income taxes. This could lead to your wages being garnished (taken directly from your paycheck), your bank accounts being seized, or even other personal belongings being taken. It can have a big effect on your finances.
• Sales tax levy: A sales tax levy happens when a business fails to collect or pay the sales tax it owes. This can lead to the government taking business assets like inventory or property. It’s important for businesses to follow sales tax rules to avoid this.
• Business tax levy: A business tax levy happens when a business doesn’t pay its taxes, like income or payroll taxes. The government can seize business assets, shut down the business temporarily, or take other actions if taxes aren’t paid.

Why Does the IRS Issue a Notice of Levy?

The process of issuing a notice of levy includes multiple steps, and understanding why the IRS sends this notice can help you respond before things escalate. 

• Unpaid tax debt after multiple warnings: The IRS sends levies when people ignore collection notices and don’t pay their tax bills on time.
• Failed payment arrangements: Sometimes people set up payment plans with the IRS, but then leave them unattended. When this happens, the IRS moves to levy action since the original agreement was broken.
• Non-compliance with filing requirements: Not filing tax returns is a red flag for the IRS. When taxpayers skip filing altogether or ignore their tax duties, levy proceedings often follow.

Also Read: Does an IRS Offer in Compromise Take Away Your Tax Refunds?

Process of Receiving a Notice of Levy From the IRS

Receiving a notice of levy from the IRS doesn’t happen overnight. It is a series of actions that begins when a taxpayer fails to resolve their unpaid tax debt.

Let’s understand the various steps involved in the levy process:

Step 1: Tax assessment and billing

• The IRS processes your return or files a substitute return. 
• If the IRS finds you haven’t paid in full, they consider it an unpaid balance.

Step 2: IRS forwards a tax bill (Notice CP14)

The first official notice is CP14, which is your initial tax bill. It outlines the amount owed, including any penalties and interest.

• The notice asks you to pay within 21 days. 
• If you fail to pay within 60 days of the CP14 notice, the IRS proceeds with the collection activity.

Step 3: Follow-up notices (CP501, CP503, and CP504)

If you don’t respond to the CP14 notice, the IRS continues to send reminders:

• CP501: This is a second reminder that your tax balance remains unpaid. It typically arrives a few weeks after CP14.
• CP503: If you ignore CP501, you’ll get CP503. This letter escalates the urgency and warns that more serious collection actions may follow if the balance isn’t paid.
• CP504: This is the final warning before a levy. It notifies you the IRS intends to levy your state income tax refund and possibly other assets if you don’t act. This letter also mentions that the IRS may begin seizing property or rights to property.

Step 4: Final notice of intent to levy (Letter 1058 or LT11)

This is the official Final Notice of Intent to Levy and Notice of Your Right to a Hearing.

• You have 30 days from the date of this letter to request a Collection Due Process (CDP) under Form 12153 (Request for a Collection Due Process or Equivalent Hearing). 
• If you don’t respond in time, the IRS can begin levying wages, bank accounts, Social Security benefits, and more.

Step 5: Levy enforcement begins

• If no resolution is reached within the 30-day window following the final notice, the IRS can proceed with the levy. 
• This may involve wage garnishment, bank account seizure, or other enforced collections.

What happens after you receive a notice of levy?

A Notice of Levy from the IRS means they’re ready to seize your assets, not just warning you. It follows multiple attempts to collect unpaid taxes.

Here’s what happens next:

1. IRS targets your assets: The IRS can take money from your bank accounts, garnish wages, or seize payments owed to you. Physical assets like vehicles or property may also be at risk.
2. Your employer or bank is notified: For wage garnishment, your employer gets Form 668-W to withhold part of your paycheck. For bank levies, your funds are frozen for 21 days before being sent to the IRS.
3. Ongoing wage garnishment: Wage levies continue each pay period until the debt is paid, a payment plan is set up, opts for a financial relief program, or financial hardship is proven.
4. The levy doesn’t stop until resolved: The IRS keeps collecting until your tax debt, penalties, and interest are fully paid or you take proper action.
5. No credit hit, but real-life stress: Levies don’t appear on your credit report, but frozen accounts and missed bills can cause real financial pain.
6. You still have options if you act fast: Even after receiving a levy, you may qualify for a payment plan, hardship status, or settlement, but time is critical.

How to Respond to a Notice of Levy From the IRS?

Receiving a Notice of Levy from the IRS is serious, but it’s not the end of the road. You still have options, and taking immediate, informed action can help protect your money. 

Here’s a step-by-step guide on how to respond effectively:

Step 1: Read the notice carefully

The notice will explain why the IRS is issuing the levy, how much you owe, and what assets (e.g., wages, bank funds, or property) may be seized. Look for the IRS form number (often CP90, CP91, or Letter 1058) and check for deadlines.

Step 2: Verify the debt

Check your tax records or IRS account online to confirm the balance. Sometimes the IRS sends levies based on estimated or outdated amounts. If you believe the levy is a mistake, you’ll need to provide proof to the IRS quickly.

Step 3: Respond within the 30-day window

You have the legal right to appeal a levy, but you must act within 30 days of the notice date. This is your chance to request a Collection Due Process (CDP) hearing using IRS Form 12153. Filing this stops the levy while your case is reviewed.

Step 4: Contact the IRS immediately

Whether or not you file an appeal, it’s smart to call the IRS at the phone number listed on your notice. You can negotiate directly with an agent to set up a payment plan to stop or delay the IRS levy enforcement process or resolve the issue.

Step 5: Submit financial info if requested

To qualify for certain relief options, the IRS may ask for financial documentation. This might include Form 433-A or Form 433-F. Be honest and thorough; missing or false info can hurt your case.

Step 6: Get professional help if needed

If the process feels overwhelming, you don’t have to do it alone. A licensed tax professional, like Hall’s IRS, can deal with the IRS on your behalf, represent you during appeals, and help you choose the best strategy.

What Are Your Options If You Can’t Pay?

Here are several options available to reduce your stress.

• Installment Agreement: A formal monthly payment plan that lets you pay off your tax debt over time.
• Offer in Compromise (OIC): A settlement option that allows you to pay less than the full amount owed if you qualify.
• Currently Not Collectible (CNC) Status: A temporary suspension of IRS collection actions due to financial hardship.
• Temporary Delay in Collection: A short-term hold on collection efforts when you’re experiencing temporary hardship.
• Partial Payment Installment Agreement (PPIA): A plan that allows you to make smaller payments if you can’t pay the full amount.
• Innocent Spouse Relief: A relief option for married taxpayers who are not responsible for the tax debt caused by their spouse’s actions.
• Injured Spouse Allocation: A method to protect your refund from being used to cover your spouse’s tax debt.
• Bankruptcy as a Last Resort: A way to halt levies through an automatic stay, but it should be considered only when other options are exhausted.
• Collection Due Process (CDP) Hearing: A formal process where you can appeal IRS collection actions and seek a resolution.
• Penalty Abatement Requests: A way to reduce or remove penalties that have increased your tax debt.

Each relief option has its own eligibility criteria, and the IRS will determine whether you qualify for it.

How a Tax Professional Helps You With a Notice of Levy?

An IRS Notice of Levy is a direct threat to your assets. But with the help of the right guidance, you can overcome difficult situations, once and for all.

Here’s how our expert team of Hall’s IRS steps in to protect you:

• Fast response: We contact the IRS within 24 hours to request a levy release or temporary hold, giving you time to breathe and act strategically.
• Expert case review: We dig into your IRS records and financials to understand what triggered the levy and how to stop it.
• Direct IRS representation: From negotiating payment plans to filing for Currently Not Collectible status, we handle all communication with the IRS for you.
• Real communication: No bots, no fluff; just clear updates, real answers, and professionals who care.

How to Avoid Getting a Notice of Levy From the IRS?

Being attentive and responsive to IRS notices helps prevent future complications with the tax authority. Here are some various ways to avoid getting a notice of levy from the IRS in the future.

• Focus on full and on-time payment of taxes to avoid the IRS’s triggers to take action.
• Always respond to the IRS letters to avoid the chance of levy enforcement.
• Apply for an IRS payment plan to pay owed taxes more efficiently.
• Negotiate with the IRS to settle debt temporarily if you are facing financial hardship.

Act Now to Avoid The Irs Levy Consequences With Hall’s IRS

A notice of levy from the IRS is a serious step toward seizing your wages, bank funds, or property. That’s where Hall’s IRS steps in with real, personalized solutions. 

We dive deep into your tax file to find errors, overcharges, or missed relief options. Pushing forward, we find the plan that fits your life and income. 

When the IRS comes after your money, we come with answers. If you’ve received a notice of levy from the IRS, don’t wait—contact us today.