IRS Levy: What is IRS Tax Levy & How to Resolve It

Last updated on August 23, 2021

An IRS tax levy is the administrative action the IRS takes to collect tax debt by seizing the property of a taxpayer. For placing a tax levy, the IRS does not require permission from the court. Taxpayers who avoid, refuse or fail to pay their tax debt may face IRS levy.

Under a tax levy, the IRS can seize and/or sell a taxpayer’s:

• Property such as house, car, boat etc.
• Property belonging to the taxpayer, but being held by somebody else such as bank account(s), wages, retirement funds, insurance, rental income, accounts receivables.

The IRS chooses which assets of a taxpayer it places a levy on.

When Does the IRS Place Levy?

The IRS only places a levy after it has sent many notices to a taxpayer concerning the payment of tax debt. Taxpayers must respond to early notices regarding back taxes to avoid a levy. They must choose an IRS tax debt payment plan to:

• Repay the total debt amount
• Reduce the tax debt amount
• Remove/decrease IRS penalties
• Postpone paying the debt
• Repay the debt amount in installments

If an action is not taken by a taxpayer to resolve the problem of tax debt, the IRS, after sending multiple notices, finally places an IRS levy to fulfil the tax debt. It is in the interest of taxpayers to avoid such aggressive collection actions by the IRS by beginning to resolve their tax issue as soon as they receive initial notices from the IRS concerning tax debt.

IRS Levy and Tax Help

In cases where taxpayers have received the last IRS notice Final Notice of Intent to Levy and Notice of Your Right to A Hearing regarding the tax debt, they must act to resolve the case. This is the final notice the IRS sends before placing a levy. After it, the IRS does not correspond with taxpayers.

Those taxpayers who are looking to resolve their back taxes problem and those who want to stop a levy can take help from tax lawyers or tax resolution companies. For complex tax issues, it is advisable to use the services of tax experts. They help taxpayers to choose an IRS debt payment plan that is suited to them according to their financial condition. They work on behalf of taxpayers to avoid or stop an IRS levy.

Taxpayers must seek help immediately if they have not responded to the final notice of the IRS for levy so that they can stop the levy before it is placed. A levy is difficult to resolve after the IRS has seized the property of a taxpayer. Therefore, it is best to start working to resolve a tax debt case at the earliest.