Glossary

Letter 668D (Release of Levy)

What Does IRS Letter 668D (Release of Levy) Really Mean?

Letter 668D, officially titled “Release of Levy,” is an official IRS document that notifies you that a previously issued tax levy has been lifted. A tax levy is the IRS’s legal right to seize your property, like bank accounts or wages, to pay off a tax debt. A release of levy means the IRS is no longer doing so. It essentially says, “We are stopping the forced collection of your debt through levy.”

Understanding the IRS’s Letter 668D: Release of Levy

So, you’ve received a letter from the IRS called a “Letter 668D (Release of Levy)”. That might sound a little intimidating, but it’s actually good news! Let’s break down what it really means in simple terms.

What is a Tax Levy, Exactly?

Before we dive into a release, it’s important to understand what a tax levy is. Imagine you owe money to the IRS, but you’re not paying it. After sending you several notices, if you ignore them, the IRS has the legal right to go after your assets. This is called a levy. It’s like the IRS saying, “Okay, we’ve waited long enough, now we’re going to collect what you owe”. They can seize things like money in your bank account, wages, or even property like cars. It’s a serious collection action.

Think of it like this: If you don’t pay your bills to a power company, eventually they might shut off your electricity. A tax levy is like the IRS shutting off your access to your own funds to settle your outstanding tax bills.

How Does a Levy Start?

The IRS doesn’t jump straight to a levy. They’ll first try to communicate with you and give you time to make payments. The process usually involves multiple notices, giving you opportunities to resolve the tax debt voluntarily. If those efforts fail, the IRS can then legally pursue a levy. They need to notify you before they seize your assets, but it’s definitely a consequence you want to avoid.

Letter 668D: The Green Light – Release of Levy

Now, let’s talk about the letter you actually received, Letter 668D. This is a “Release of Levy.” It’s the IRS saying, “Okay, we’ve received payment for the debt or made other arrangements, or we are reversing the levy for other reasons, and we’re now stopping the levy on your assets.” It’s a very positive sign! It means the IRS is no longer actively seizing your property or money to cover your tax debt. It indicates they have stopped the forced collection efforts.

Why would the IRS Release a Levy?

There are a few key reasons why you might receive a Letter 668D:

You Paid Your Tax Debt: This is the most common reason. If you paid off the full amount you owed, including interest and penalties, the IRS will release the levy.
You Made an Arrangement: You might have worked out a payment plan or settlement with the IRS. If they agree to this plan and it’s in motion, the levy may be released.
The IRS Made a Mistake: While rare, errors do occur. If the IRS determines they levied your assets improperly, they will release the levy.
It’s in the Best Interest of the IRS: In some cases, if the levy is causing unnecessary financial hardship, the IRS may remove the levy to allow you to become financially stable enough to resolve your tax liability.

What does a Letter 668D (Release of Levy) Look Like?

The letter itself will usually include:

Your name and address
The specific tax year(s) associated with the debt
The type of levy (e.g., bank levy, wage levy) being released
A statement confirming that the levy is no longer in effect
Instructions, if any, about how to proceed.

It’s important to carefully read the entire letter.

What Does it Mean for You?

Receiving a Release of Levy means:

Bank Account Access: If the levy was on your bank account, you can now access your funds.
Wage Garnishment Stops: If the levy was on your wages, your employer will no longer have to withhold part of your pay for the IRS.
Property is No Longer at Risk: If property like your car was subject to levy, the IRS won’t seize it now.

Essentially, it frees up your assets and allows you to return to normal financial activity without worrying about the IRS taking your money.

What to Do After Receiving a Letter 668D

While a Letter 668D is a positive sign, it’s still wise to take a few steps:

Keep It Safe: This letter is an important document. File it away safely with your other tax documents.
Verify Accuracy: Double-check the letter against your records. Make sure the tax year and other details are correct. If there is an error, contact the IRS immediately.
Confirm All Levies Are Released: Ensure all levies, not just one, are released if you have multiple outstanding tax issues. Sometimes you will need to get multiple levies released.
Follow Any Instructions: The letter might have specific instructions. Be sure to follow them.
Don’t Forget the Original Tax Debt: The levy might be released, but if you haven’t fully paid your taxes, the debt isn’t gone. If you have a payment plan, continue to abide by its terms. If not, discuss payment arrangements with the IRS.
Consult with a Tax Professional (if needed): If you are unsure of anything, talk with a tax advisor. They can help you understand the letter, make sure you are in compliance and if additional action is necessary.

Related Concepts and Terms

Tax Lien: A tax lien is a legal claim against your property. It is different from a levy. The tax lien protects the government’s interest in your property. It comes before the levy.
Notice of Intent to Levy: This is a warning notice the IRS sends before they actually levy your assets. You will usually receive this before a levy is issued.
Payment Plan (Installment Agreement): An arrangement with the IRS to pay your tax debt over time.
Offer in Compromise (OIC): An agreement with the IRS to settle your tax debt for a lower amount than what you owe.

Common Mistakes/Misconceptions

Thinking the Debt is Gone: A release of levy only stops the IRS’s immediate collection action; it doesn’t erase the tax debt.
Ignoring Future Notices: You might still receive other notices from the IRS until the tax issue is fully resolved. Don’t ignore them!
Delaying Communication: The best way to prevent a levy from occurring in the first place is to communicate with the IRS when you encounter tax troubles.

In summary, receiving a Letter 668D (Release of Levy) is generally good news. It signals that the IRS has stopped the forced collection of your tax debt through a levy. However, it’s not a free pass. It’s important to understand why the levy was released and continue to work with the IRS to resolve your full tax liability. Remember, taking proactive steps to manage your taxes can help avoid issues like levies in the first place.

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