IRS Tax Levy to Collect Back Taxes

Last updated on October 27, 2023

A levy is the final collection action of the IRS to recover a tax debt. Under a levy, the IRS uses the seized asset or garnished wages, bank accounts, etc. to satisfy the tax debt. The IRS can levy property or a taxpayer’s right to property. This may include the individual’s house, vehicle, bank accounts, wages, dividends, rental income, retirement accounts, commissions, and accounts receivables.

Before the placement of a levy, the IRS is required to send a final notice regarding intent to levy. This notice informs the taxpayer about the impending action, as well as what he or she can do to prevent it.

The IRS can only place a levy if they fulfill these requirements:

• The IRS assessed the tax debt amount and sent the taxpayer a Notice and Demand for Payment
• The taxpayer neglected or refused to pay the tax, and
• The IRS sent a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy.

The IRS usually sends the final notice of their intent to levy through the postal service; they may also give this notice in person, or leave it at your residence or office. If the IRS levies your state tax refunds, then you may expect to receive the Notice called Notice of Levy on Your State Tax Refund, Notice of Your Right to Hearing after the levy.