A levy is a legal action taken by the IRS to seize a taxpayer’s property or assets to collect unpaid tax debt. This is one of the most severe collection actions the IRS can take and is typically used when a taxpayer has ignored previous notices, such as the Final Notice of Intent to Levy (IRS Letter 1058) or failed to respond to other IRS collection efforts.
The IRS can levy various types of assets, including:
- Bank accounts: The IRS can freeze and withdraw funds from your bank account.
- Wages: The IRS can garnish a portion of your paycheck directly from your employer.
- Social Security benefits: A portion of your benefits can be garnished to satisfy the tax debt.
- Property: The IRS can seize and sell personal property, such as cars, real estate, or business equipment.
To stop a levy, taxpayers can pay the full amount owed, set up an Installment Agreement, or submit an Offer in Compromise. Taxpayers may also request a Collection Due Process (CDP) hearing to appeal the levy and propose alternative solutions to resolve the debt. It is important to take action as soon as possible when facing a levy to prevent the seizure of assets.