IRS Asset Exposure Decision Checklist
The IRS issues a Final Notice of Intent to Levy after you fail to respond to earlier payment demands or collection notices. This notice represents the last formal warning before the IRS can legally seize your assets to satisfy unpaid tax debt, and it grants you specific rights under federal law, including the right to request a Collection Due Process hearing within 30 days from the date printed on the notice.
What This Notice Means
This notice authorizes the IRS to seize your wages, bank accounts, Social Security benefits, tax refunds, real estate, or other property. Depending on your account type and circumstances, this notice arrives as Letter 1058, Letter LT11, or Notice CP90.
Receiving this notice means the IRS has completed its required notification process under
Internal Revenue Code Section 6331. Once the 30-day Collection Due Process period expires, the IRS can proceed with collection efforts.
This notice is not optional, and treating it as routine correspondence eliminates your opportunity to challenge the levy through formal channels before enforcement begins. Ignoring the deadline permanently removes your right to a CDP hearing before asset seizure occurs.
Your Right to Request a Collection Due Process Hearing
You have 30 days from the date on the notice to request a CDP hearing by filing Form 12153 with the address shown on your correspondence. The 30-day deadline begins on the date printed on the notice, not the date you receive it, and missing this deadline permanently eliminates your right to a CDP hearing.
Filing Form 12153 after the 30-day window allows you to request an Equivalent Hearing within one year. An Equivalent Hearing provides similar review procedures but does not include the right to appeal to the Tax Court if you disagree with the outcome.
During a Collection Due Process hearing, you can
- Propose alternative collection methods, such as an installment agreement or an Offer in
Compromise.
- Request currently not collectible status if paying the tax liability would create financial
hardship.
- Challenge the appropriateness of the levy action based on your current financial
situation.
- Dispute the underlying tax liability if you have not previously had an opportunity to
contest it.
The CDP hearing temporarily suspends active collection efforts while the Independent Office of
Appeals reviews your case. You must submit a Collection Information Statement on Form 433-A or Form 433-F to support any payment proposals or hardship claims during the hearing process.
How IRS Bank Levies Work
When the IRS serves a bank levy on your financial institution, the bank immediately freezes the funds in your account as of the date the levy is received. Internal Revenue Code Section
6332(c) requires the bank to hold these frozen funds for 21 calendar days before surrendering them to the IRS.
This 21-day waiting period provides you with a critical window to contact the IRS, arrange full payment, or request a levy release based on financial hardship. The bank charges a processing fee for executing the levy, which the IRS does not reimburse.
Levies capture only the funds present in your account on the date the bank receives the levy notice, unless the IRS issues continuous levies on recurring deposits such as direct deposit wages. Multiple levies can be filed against the same account if the initial levy does not satisfy the full tax debt.
Payment Arrangements That Stop Collection Action
You can prevent or stop IRS levies by establishing a formal payment arrangement before the levy is filed. Short-term payment plans allow you to pay the full balance within 180 days without setup fees, while installment agreements require monthly payments over an extended period.
The IRS will consider an Offer in Compromise if you demonstrate that you cannot pay the full tax liability before the collection statute expires. Your collection statute expiration date typically falls ten years from the date the IRS assessed your tax liability, and this ten-year period continues to run even if you enter currently not collectible status due to financial hardship.
Currently Not Collectible Status and Financial Hardship
The IRS may place your account in currently not collectible status if you prove that paying the tax debt would prevent you from meeting necessary living expenses. Currently not collectible status does not forgive your debt or stop interest and penalties from accruing on the outstanding balance.
Tax liens remain in place to protect the IRS's interest in your property, and the ten-year collection statute continues to run during this period. You must provide complete financial documentation using Form 433-A or Form 433-F to support your hardship claim.
National and local expense standards determine reasonable living expenses when the IRS evaluates hardship requests. Both interest and late payment penalties continue to increase the total amount you owe throughout the currently not collectible period.
Actions You Must Take Immediately
Contact the IRS using the phone number on your notice as soon as you receive it. Request information about your current account status and ask whether any levies have already been filed against your assets.
Gather your last three months of bank statements, pay stubs, and recent tax returns before calling. Document every conversation with IRS representatives by recording the date, time, employee name, and discussion details.
Send all written correspondence to the IRS by certified mail with a return receipt requested to establish proof of timely filing. Request managerial review if a revenue officer is assigned to your case, and you disagree with proposed collection actions.
Common Mistakes That Worsen Your Situation
Making a single partial payment without establishing a formal payment arrangement does not stop the levy process. The IRS applies your payment to the outstanding balance and continues enforcement action unless you have a documented agreement.
Changing your bank account or moving funds after receiving the notice appears as evasion and may trigger fraud investigations. Expanding collection efforts to reach new accounts becomes the IRS's response rather than halting enforcement.
Submitting incomplete or inaccurate financial information damages your credibility and results in rejection of payment proposals. Financial statements are verified against tax returns and third-party records, and discrepancies trigger immediate denial of alternative collection requests.
Need Help With IRS Issues?
If you're facing IRS issues and need expert guidance beyond this checklist, we're here to help with licensed tax professionals.
- Wage garnishment and bank levy release
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