If you receive several notices on your unpaid balance, consider them an early reminder from the IRS. However, when you get a Notice of Intent to Levy, these reminders now become a warning. This is the IRS’s way to officially warn you that they plan to seize your property to satisfy your debt. Notices like IRS Form 668-W or Letter 1058 are common formats used to communicate this intent.
Receiving a Notice of Intent to Levy does not imply that the IRS has already begun seizing your assets. However, it does mean that enforcement is imminent if you don’t take action. At this point, you still have a limited window to resolve the issue before the levy is executed. So, regardless of the exact levy notice that was issued, you should either appeal, negotiate, or explore various payment options to clear the debt before enforcement begins.
We at Victory Tax Lawyers have over 10 years of experience in tackling IRS enforcement actions, becoming a trusted name for individuals and businesses facing tax levies. Our tax levy lawyers have helped different taxpayers stop levies, reduce their debt, and regain control of their finances. So, if you’ve been issued a levy notice, schedule a free consultation and let’s walk you through your resolution options.
In this guide, we’ll explain exactly what the Notice of Intent to Levy means, the different types of levy notices, why you may have received the notice, and what you should do to prevent the levy.
What Is a Notice of Intent to Levy?
A Notice of Intent to Levy is the Internal Revenue Service’s written warning that it plans to seize your assets. Getting this notice implies that the IRS has gone beyond just asking you to resolve your unpaid balance. The agency is preparing to act on its legal right to recover the debt through collection actions. Under Internal Revenue Code Section 6331(d), the IRS has full authority to issue a levy if you fail to address a tax debt. However, the actual levy is issued only when the IRS has sent you repeated notices.
A levy automatically gives the IRS full liberty to legally seize your property to satisfy a tax liability. It could be in the form of freezing your bank account, garnishing your wages, or, in most cases, taking control of other assets like vehicles or retirement accounts
Unlike a tax bill or payment reminder, a Notice of Intent to Levy indicates a shift from assessment and the start of the IRS’s enforcement process. On the other hand, a federal tax lien is a legal claim against your assets to secure the government’s interest in the debt you owe.
In most cases, the IRS is the one to send this notice. However, state tax authorities have similar enforcement rights to send levy notices under their legal frameworks. Regardless of the source, the implications of the notice from both authorities are profound and time-sensitive.
Why Did You Receive a Notice of Intent to Levy?
A common reason you may have received a Notice of Intent to Levy is that the IRS believes you have unpaid tax debt. The agency views pending balance as your legal obligation regardless of whether the debt was the result of a missed estimated payment, past tax returns, or even a tax audit adjustment.
Secondly, before issuing a tax levy notice, the IRS typically sends out preliminary notices, such as the CP14(balance due notice) and CP503(reminder notices). When those letters go unanswered, the agency goes ahead to send you Letter 1058 or CP90. Once you receive one of these levy notices, you can expect the enforcement phase to begin soon.
Other situations or instances that can trigger the IRS to issue a levy notice include:
- You failed to file tax returns
- You have unpaid tax penalties or interest
- You rejected or defaulted on installment agreements
- You didn’t give a response to the initial collection efforts
What Can the IRS Levy?
The IRS has the legal authority to seize your bank account, wages, Social Security benefits, and a wide range of your personal property to compensate for your unpaid taxes.
Bank accounts: The IRS has the right to issue a levy to your financial institution and freeze the funds in your bank account if you don’t comply. You have a time window of 21 days from the date your bank receives it to resolve the underlying issue. During this timeframe, you will not be able to access or withdraw any funds from the account.
Wages and income: Wages and income garnishment will not stop until you’ve cleared your debt. This implies that the agency will notify your employer to deduct a portion of your paycheck until the debt is resolved. They are also bound to go as far as garnishing your state income tax refund.
Social Security benefits: Under the Federal Payment Levy Program (FPLP), the IRS can levy up to 15% of your Social Security benefits. This includes retirement and survivor benefits. However, your Supplemental Security Income (SSI) is exempt.
In a case where the IRS is not able to collect through your bank accounts, wages, or Social Security benefits, they may go further to seize your physical property, such as real estate, vehicles, retirement accounts, dividends and rental income. If a final Notice of Intent to Levy was issued to a business, the IRS may also seize inventory, business equipment, and accounts receivable. Additionally, the IRS could levy your state tax refund under the state income tax levy program to offset back taxes.
Overall, you should be aware that the IRS may result to seizing anything valuable you have and leave you with only the bare essentials. So, if you’ve received a levy notice, you have the right and option of resolution. However, they don’t last forever.
Types of IRS Intent to Levy Notices
The IRS will not seize your assets without issuing a notice. Instead, it sends several notices of intent to levy, which are expected to be taken seriously. Each notice serves a specific purpose and has a timeline for response for any collection action. The IRS’s intent to levy notices include:
LT11: Notice of Intent to Levy
Letter 11 is the earliest Notice of Intent to Levy from the IRS. It is issued to inform you that the IRS plans to seize your assets to recover unpaid tax. Every taxpayer has a timeframe of 30 days to respond to the notice before collection action kicks off. During this time window, you can request a Collection Due Process (CDP) hearing from the IRS Independent Office of Appeals.
Letter 1058: Final Notice of Intent to Levy
Letter 1058 carries similar weight to LT11 and can be used interchangeably. It’s a final notice before the IRS moves forward with collection action. This notice also gives a response time window of 30 days and allows you to appeal through a CDP hearing during the timeframe.
Form 668-A: Notice of Levy on Property
If the IRS believes that your bank account should be levied or any other property should be seized, it issues Form 668-A. The form is sent directly to the financial institution or third party holding your assets. Once the form is received, the assets are frozen and can be legally transferred to the IRS if there’s no resolution.
Form 668-W: Notice of Levy on Wages and Income
Form 668-W is sent to your employer by the IRS employee who is handling your case to begin garnishing your wages. The form often highlights the portion of your earnings that must be deducted and remitted directly to the IRS. Also, remember that the wage levy will remain in place until the full tax debt is paid or a resolution is reached.
CP90: Final Notice of Intent to Levy
CP90 is another version of the final warning letter. It is sent to notify you of the IRS’s plan to enforce a levy and also highlight your appeal rights to a hearing. Similarly to Letters 1058 and LT11, you must respond within 30 days of receiving the letter. Failing to act within this timeframe may result in the loss of your right to a CDP hearing and the IRS may proceed with issuing the levy.
CP297: Final Notice of Intent to Levy (for Businesses)
CP297 is the final levy notice sent to businesses that owe taxes to inform them of imminent collection actions. If your business receives this notice, keep in mind that the IRS may soon garnish your business income or seize assets unless a resolution is reached.
Form 12153: Request for a Collection Due Process Hearing
Form 12153 (Request for a Collection Due Process or Equivalent Hearing) is not a levy notice, it’s your tool for responding to a Notice of Intent to Levy. With this form, you’ll be able to exercise your appeal rights to a CDP hearing.
Each of these notices signals that the IRS is preparing for collection enforcement. So you need to take action quickly. If you’re not sure how to respond on your own, this is when you should hire a tax attorney who can help you respond strategically and negotiate a solution with the IRS.
What Happens After a Notice of Intent to Levy Is Issued?
It may have started with a letter. However, don’t assume that the Notice of Intent to Levy is just another piece of mail from the IRS. From the date printed on the notice, the IRS gives you a 30-day grace period to respond, appeal, or resolve the debt.
In case you don’t take corrective action before the deadline, collection efforts can take effect without further warning. The IRS can begin levying your bank accounts, garnishing wages, or seizing assets like your car or home. It can also target our Social Security benefits and retirement accounts.
Additionally, even after receiving a Notice of Intent to Levy, you still have the legal right to request a Collection Due Process (CDP) hearing by filing IRS Form 12153. However, the request must be made within the 30-day time window.
It might also interest you to know that missing the time to request a CDP hearing doesn’t leave you out of resolution options. You can opt to resolve the issue through an Installment Agreement, an Offer in Compromise, or a Currently Not Collectible (CNC) status.
Lastly, if you ignore the IRS after receiving a final Notice of Intent to Levy, you risk losing your right to appeal and may face severe enforcement actions.
Consequences of Ignoring the IRS Notice
Once the IRS crosses that 30-day mark and there’s a response from you, they don’t need further permission to begin seizing assets. What started as a letter may result in consequences that may affect your income, property, and long-term financial health. These consequences are:
- Immediate levy action to satisfy the unpaid debt
- Long-term credit damage, which will have a negative influence on your credit score
- Additional penalties and interest that will affect you during future tax periods
- Legal costs and further enforcement
What to Do if You Receive a Notice of Intent to Levy
A very important action you ought to take after receiving an IRS Notice of Intent to Levy is to act immediately, especially if you have seriously delinquent tax debt. Beyond being a warning, the notice signifies that the IRS is giving you one final chance to resolve the debt before deciding to levy. Let’s break down the steps you should take:
Don’t Ignore the Notice
Ignoring a levy notice is a costly mistake that shouldn’t be made by any taxpayer. If the IRS doesn’t get any response regarding the notice, they will go ahead and seize your assets, mostly starting with your wages or bank accounts.
Get a Tax Professional Involved
You don’t have to face the IRS on your own. Tax professionals can be of good help. A skilled tax attorney can assess your situation, identify the best resolution option, and, if need be, represent you in discussions with the IRS.
Explore Resolution Options
Depending on your circumstances, you may qualify for alternative resolution options that will immediately prevent collection and help you settle your debt over time. The different options include:
- Setting up an Installment Agreement: To repay your debt in monthly installments, setting up a payment plan online is a good option. This will help prevent enforced collection.
- Submitting an Offer in Compromise: The IRS may accept a lower amount to settle the debt if you can show the necessary proof that paying your full balance would cause severe financial hardship. This alternative option requires a well-detailed application.
- Applying for Currently Not Collectible (CNC) Status: The IRS may also pause collection efforts if you can fully demonstrate that your current income and expenses are low and you cannot afford to satisfy a tax liability. This is not a form of debt forgiveness. Instead, it buys you time to regain financial stability and halt levies.
- Requesting a Collection Due Process (CDP) Hearing: You have the legal right to appeal a levy notice by filing Form 12153 within 30 days. Submitting the collection due process form puts a temporary stop to IRS collection until the hearing is resolved, giving you a fair chance to present your case.
How to Request a Collection Due Process (CDP) Hearing
To initiate a CDP hearing, you must act fast by filing and submitting IRS Form 12153 within 30 days from the date shown on the issued levy notice. The form gives you room to formally request an equivalent hearing that allows the IRS to pause collection actions while your case is reviewed. Be sure to include all relevant details, including the exact notice you received and why you believe the levy should not proceed.
Once your request is submitted within the required timeframe, the IRS will schedule your hearing with an officer from a department independent of the collections division. This department is called the IRS Independent Office of Appeals. During the hearing, you can go ahead and describe your situation, challenge the proposed levy, and propose an alternative resolution to avoid the actual levy.
You should also keep in mind that one of the most significant advantages of a CDP hearing is that the IRS suspends the levy while your case is under review. So, this means you get no wage garnishments, bank account levies, or seizures until the hearing is resolved.
Can You Stop or Delay a Levy?
Yes, you can stop or delay an IRS levy by responding within the expected 30-day timeframe and presenting a valid reason. The IRS will not wait indefinitely once it sends a Notice of Intent to Levy. If you’re experiencing financial hardship, the IRS may temporarily delay collection by classifying your account as Currently Not Collectible (CNC). With this status, the IRS acknowledges that seizing your income or assets would leave you unable to meet basic living expenses.
Another way to stop a levy is by entering into a payment agreement with the IRS. As long as you stick to the plan, the IRS will not move forward with a levy.
Beyond the alternative options, you can decide to appeal the decision if you believe the levy is unjustified or if the IRS made an error. Filing Form 12153 for a Collection Due Process hearing automatically delays enforcement until the appeal is resolved.
Got a Notice of Intent to Levy From the IRS?
A Notice of Intent to Levy is a final warning from the IRS before your wages and bank accounts are levied. So, it’s not to be disregarded or postponed. Rather than also totally ignoring the notice, give a response to correct the issue or work out a solution. It could mean setting up a payment plan for Currently Not Collectible status or submitting an Offer in Compromise. However, keep in mind that you mustn’t do this alone. A tax professional can help with the entire process.
At Victory Tax Lawyers, we understand the urgency, pressure, and fear that comes with receiving a levy notice. Our experienced tax attorneys can help you negotiate directly with the IRS, explore relief programs, and protect your rights every step of the way. Schedule a free consultation or visit our Los Angeles office to take proactive steps towards resolution before the levy is enforced.
FAQs
Can the IRS Levy Without Notice?
No, the IRS must send you a final Notice of Intent to Levy at least 30 days before taking enforcement action. This way, you can have time to respond or appeal. So, if you don’t receive a notice, the levy is not to be considered valid.
How Long Does an IRS Levy Last?
A levy remains in effect until you pay off the IRS tax debt, make payment arrangements with the IRS, or until it’s released due to your financial situation.
How Many Notices Does the IRS Send Before Levy?
The IRS sends over four or five notices before enforcing a levy. This includes reminder letters (CP14, CP503, CP504) and intent to levy notices (Letter 1058 or CP90).
What if You Don’t Agree With the Levy Notice?
If you don’t agree with the levy notice, you have the full right to appeal. Use Form 12153 to request a Collection Due Process (CDP) hearing within 30 days of receiving the notice. With the appeal request, you can pause the levy and get a chance to present your case.
Will I Go to Jail Over Unpaid Taxes?
Yes, you can go to jail. However, going to jail over unpaid taxes only occurs under specific circumstances. You must have committed criminal offences, including tax evasion, willful failure to file, or intentional submission of false returns before a jail term is considered.
