IRS Notice of Intent to Levy: What it Means, What to Do
Updated May 23rd, 2021 by Charlie Corsello
What Is an “Intent to Levy” Notice?
An IRS intent to levy notice is a notice the IRS sends if it plans to seize your assets (authorized by Internal Revenue Code Section 6331 (d)). You usually only get this notice if you have seriously delinquent taxes or irs tax debt that you haven’t tried to resolve. It references a tax period for which you owe taxes. The IRS must send you a notice the first time, for each tax and period, it intends to collect by taking your property. The IRS typically cannot take your property unless it provides you notice in advance.
Under the law, the IRS must take the following steps at least 30 days before seizing any assets:
- Provide you a written notice of the intent to levy and explain your right to appeal
- Include an explanation of the reason for the levy, the seizure process, and your options.
- Deliver the notice personally or send it to your law known address via registered mail.
However, there are exceptions to the 30-day rule with the following exceptions: state tax refunds, if the IRS feels the collection of tax is in jeopardy, Disqualified Employment Tax Levies (DETL), and federal contractor levies.
What Assets Can the IRS Take If You Don’t Pay Your Taxes?
- Property (cars, homes, personal property)
- Rights to property
- Funds in bank accounts
- Social Security benefits
- Wages from your employer
- Contractor or vendor payments due to you
- Employee travel advances
- Retirement benefits
- Government retirement benefits from the Office of Personnel Management (OPM)
- State income tax refund or state tax refund
On top of that, the IRS can take almost anything you own beyond the bare essentials. Remember, the IRS can leave you with very little. The IRS provides publication 1494 for figuring the amount of income that is exempt from levy. The table applies to wages, salary, and other pay. It takes into account your filing status, pay frequency, and the total number of exemptions you took on your most recent tax return.
What Notice Does the IRS Send If It Plans to Seize Your Assets?
The IRS sends a variety of different notices and letters. These are the most common intent to levy notices:
- CP504 - IRS intends to levy your assets
- CP90 - Final Notice (Individuals)
- LT1058 - Final Notice
- LT11 - Final Notice
- CP297 - Final Notice (businesses)
What Should You Do If You Receive an Intent to Levy Notice?
The fastest way to stop the IRS from seizing your assets is to pay the entire tax debt balance. Once you make the payment, the IRS instantly stops all collection activities.
However, if you don’t have the funds to pay the full tax debt amount, there are other options. The IRS is usually willing to work with people. In particular, you can apply for an installment agreement or an offer in compromise. In many cases, it is in your best interest to work with a licensed tax professional (EA, CPA, Tax Attorney). Here are some options:
An installment agreement (IA) is when you make monthly payments on your taxes. An IA reduces the failure-to-pay penalty by 50 percent, but the IRS will continue to assess interest. As long as you keep up with your payment agreement, the IRS won’t seize your assets or engage in any other collection activity in most cases.
An Offer in Compromise is when the IRS agrees to settle your taxes for less than you owe. As a result, the IRS usually only offers this type of arrangement sparingly. In fact, in 2016, the IRS accepted 43% of all Offers in Compromise. Once the IRS approves an offer in compromise, and the taxpayer pays, all collection activity stops. However, applying can be complicated so you may want professional help.
CNC Status is also known as a hardship status or Currently Not Collectible status. With this agreement, you provide a collection information statement to the IRS proving that if the IRS forced you to pay the taxes you owe, it would create a financial hardship.
If you believe that your spouse or former spouse is solely responsible for the tax amount owed, you can look to file Innocent Spouse Relief with the IRS. You need to meet specific qualifications.
What if You Don’t Agree with the Levy Notice?
If you don’t agree with the information on the Final Notice of Intent to Levy and Notice of Your Right to a Hearing, you can file an appeal. To start, call the number on the notice, but you may want to file an appeal as well. Calling the IRS is not the same thing, and remember, you only have 30 days before the IRS takes action.
In some cases, the IRS makes a mistake. If you’ve already set up an installment agreement, contact the IRS and make sure that your account reflects that. You may also want to start the appeal process in these cases as well.
What is the Difference Between a Tax Levy & Federal Tax Lien?
A tax lien is a legal claim the government makes against your property when you don't pay your federal taxes. This includes income taxes, self-employment taxes, and other federal taxes. The lien is placed on your property, such as your home or car, and gives the government the right to seize the property if the liability isn't paid. A tax levy is a process the government uses to collect unpaid taxes from individuals and businesses. The government can also place a tax lien on your property before taking levy action. The biggest difference between a ien and tax levy is that the former is a claim against your property, while a tax levy actually allows the government to take possession of your property. Liens are also public record, so anyone can see that the IRS has a claim on your property. Tax levies are not public record.
You May Want to Get Professional Help
Tax attorneys, CPAs, and EAs (enrolled agents) can help you, in many cases, prevent the levy and or lift a levy that the IRS or state has placed on your wages. They can also help with bank levies, federal tax liens, unfiled taxes, and more. You can start your search below to find a professional that can help with your unique tax problem. Start by selecting the agency or agencies you have a problem with and then filter by your tax problem or desired solution and you will see tax resolution professionals that can help with your particular issues.