IRS Tax Levy

Having money removed from your bank account or your paycheck by IRS is not entirely new. This is called a ‘levy’, when money is removed from your bank account. A  ‘wage garnishment’ is when the IRS or state requires to withhold your paycheck and send it directly to them in order to pay off your unpaid taxes or other balances.

When this happens, there are ways to address it. You can request that the IRS remove the levy by entering into a formal payment agreement or by resolving your outstanding back taxes in full.

Understanding how tax levies apply to you and what you need to do to make the most of this is important. Of course, keeping up with your taxes and other repayments is crucial, but sometimes things make it more challenging to keep up with payments.

What is a tax levy?

An IRS tax levy is a legal action that allows the Internal Revenue Service to seize a taxpayer’s property or assets when taxes remain unpaid after multiple notices. Through a levy, the IRS can collect funds directly from bank accounts, wages, real estate, vehicles, and even retirement income to recover the outstanding balance.

A tax levy is typically a final enforcement step — the IRS generally only issues one after repeated attempts to reach the taxpayer have failed. Before a levy is placed, the IRS must send a Notice of Intent to Levy and provide an opportunity to resolve the issue or enter into a payment agreement.

If you’ve received a levy notice, it’s important to act quickly. Working with an experienced tax relief attorney can help you stop collection activity, negotiate directly with the IRS, and protect your income and property from further enforcement.

When is a tax levy issued?

There are three requirements that the IRS must meet in full before it can give a levy:

1. They sent the taxpayer a tax bill (also known as a Notice and Demand for Payment)
2. The taxpayer did not pay their taxes (either could not or would not)
3. The IRS sent the taxpayer notice that they would be issuing a levy 30 days after the letter. This is typically known as a Final Notice of Intent to Levy and Notice of Your Right to A Hearing. 

How Do I Get A Tax Levy Released?

If you’ve received an IRS levy or wage garnishment, it’s possible to have it released once you’ve arranged a payment plan or proven financial hardship. The IRS will typically remove the levy after you’ve met the terms of an approved payment agreement, extension to pay, or special relief program such as an Offer in Compromise or Currently Not Collectible Status.

When a bank levy is issued, your funds are frozen for 21 days before being sent to the IRS. Acting quickly can help protect those funds — our licensed tax professionals can contact the IRS directly, negotiate a streamlined installment agreement, and request that the levy be immediately released or faxed to your employer or bank.

Because the process can be complex and time-sensitive, it’s best to work with an experienced tax attorney or tax relief specialist. Our team can help you determine the fastest route to resolve your case, secure an IRS payment plan, and ensure the levy is fully lifted so you can regain financial control.