IRS Levy Process Guide: Understanding Collection
Actions
What an IRS Levy Means
An IRS levy is a legal seizure of your money or property to satisfy unpaid tax debt. This represents the most serious enforcement action available to the IRS short of criminal prosecution. Levies differ from liens because they actively take funds now, rather than securing a claim against future assets.
Once executed, a levy can seize wages, bank accounts, business receivables, and other financial assets. The IRS has the authority to issue levies without a court order, provided it follows specific pre-levy notice requirements. Responding quickly and accurately is essential because levees can disrupt income, business operations, and financial stability immediately.
Who This Guide Applies To
This guide applies to taxpayers who have an unpaid federal tax liability, including income tax, self-employment tax, employment tax, or excise tax. Your account has progressed beyond the notice and demand stage. You need to understand levy procedures and response options.
This guide does not apply if you are dealing with a criminal tax investigation or prosecution, if your issue involves state court wage garnishment procedures, if you received a different type of
IRS notice, such as an audit or CP notice series, or if your tax matter has been referred to the
Department of Justice.
The Pre-Levy Notice Process
The IRS must follow specific procedural requirements before executing a levy. The IRS first sends a Notice and Demand for Payment through various collection notices. The IRS then must issue a Final Notice of Intent to Levy and Your Right to a Hearing at least 30 days before levying.
This final notice is typically CP90, LT11, or Letter 1058 and provides the right to a Collection
Due Process hearing. The 30-day period begins on the date indicated on the final notice.
Understanding Levy Documents Sent to Third Parties
Form 668-A is the actual Notice of Levy sent to third parties, such as banks, customers, or
vendors, to seize property they hold for you. Form 668-W is the actual Notice of Levy sent to employers or retirement benefit payers to levy wages, salary, or retirement income.
These forms execute the levy and are sent to the third-party holding your property, not to you as the taxpayer. The IRS sends these forms to third parties only after the 30-day CDP notice period has expired without resolution.
Your Collection Due Process Rights
The Final Notice of Intent to Levy provides your right to request a Collection Due Process hearing within 30 days from the notice date. Requesting a CDP hearing within this timeframe generally suspends levy action and prevents the IRS from issuing new levies for the liabilities listed on the CDP notice.
Missing this 30-day deadline eliminates your right to a pre-levy CDP hearing and significantly reduces your ability to negotiate. After the deadline passes, you can only request an equivalent hearing with different rules and more limited protections.
Steps to Take After Receiving a Final Notice
1. Locate and read your Final Notice of Intent to Levy completely
Confirm the notice is CP90, LT11, Letter 1058, or a similar CDP notice. Note the tax years, amounts, and deadline for requesting a hearing.
2. Verify the tax debt is actually yours
Review the notice for your name, Social Security number, and business identification number, if applicable. Cross-check the tax years and liability amounts against your filed returns or prior IRS notices.
3. Determine your deadline for requesting a Collection Due Process hearing
Calculate 30 days from the notice date. This is your window to request a CDP hearing and preserve your right to contest the levy before it is issued.
4. Decide whether to request a CDP hearing
A CDP hearing allows you to dispute the levy, request installment arrangements, or propose an
Offer in Compromise before the IRS executes collection. Gather documentation of your financial situation, income, assets, and any reasons the levy would create hardship.
5. Submit a written CDP hearing request before the deadline
Send your request using Form 12153 to the address listed in your notice before the deadline expires. Include your name, address, tax identification number, the tax years in question, and a brief explanation of why you are requesting the hearing.
6. Gather financial documentation to support your position
Collect recent pay stubs, bank statements, mortgage or rent documents, utility bills, and a list of all debts and expenses. Include proof of any current tax payments, prior installment agreements, or business financial statements if self-employed.
7. Contact the IRS collection section to determine the current account status
Call the number listed in your notice or the IRS collection line to confirm whether a levy has been executed. Ask whether any prior correspondence or levy forms have been sent to third parties.
8. Document all communication with the IRS in writing
Keep copies of letters, notice receipts, and notes of phone calls, including names, dates, and what was discussed. Request confirmation in writing of any arrangements, hearing requests, or status updates.
What Happens If a Levy Is Executed
If Form 668-A is sent to your bank, the bank immediately freezes the funds in your account as of the date the levy is received. The bank must hold those funds for 21 days before sending them to the IRS. This 21-day period provides you with time to request a levy release or make arrangements. Funds you deposit after the levy date are not subject to that specific levy, though the IRS can issue additional levies.
If Form 668-W is sent to your employer, the levy remains in effect and attaches to each pay period until it is released. A portion of your wages is exempt from levy based on the standard deduction and the number of dependents you claim on the Statement of Exemptions and Filing
Status form. The wage levy continues until you pay the debt in full, the IRS releases the levy, or you establish alternative arrangements.
Grounds for Levy Release
The IRS may release a levy if you pay the liability in full, if the levy creates immediate economic hardship preventing you from meeting basic living expenses, if you establish an installment agreement or other collection alternative, or if releasing the levy will facilitate collection. Contact the IRS as soon as possible to request a levy release based on one of the following grounds.
“Currently Not Collectible” status may temporarily pause collection if you have no income or assets available and cannot pay. Provide detailed financial documentation to support your request.
Social Security and Retirement Income Levies
The IRS can levy up to 15% of Old Age and Survivors Benefits, which include retirement benefits and survivor benefits paid to adults, through the Federal Payment Levy Program. Social
Security Disability Insurance benefits are not subject to systematic levy through FPLP as of
October 2015.
Supplemental Security Income is entirely exempt from levy under federal statute. The IRS can levy most retirement accounts under federal tax law, though specific restrictions may apply depending on the account type.
When Professional Assistance Becomes Necessary
Consider seeking professional tax help if your levy notice includes unfamiliar tax years or amounts you do not recognize, if you have received multiple levies and are unsure which one to address first, or if a levy has already been executed.
You need immediate action to restore income or access to funds if your CDP hearing request was denied, or you do not understand the next available appeal option, or if you cannot afford the payment terms the IRS is proposing, and need to present a hardship case.
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