IRS Final Notice of Intent to Levy

What to Expect if You Receive an IRS Final Notice of Intent to Levy

If you’ve received an IRS Final Notice of Intent to Levy, the clock is ticking. You have 30 days to stop the IRS from seizing your wages, bank accounts, or property.

This is one of the IRS’s most serious collection actions. Fortunately, you have options, but you need to act quickly. 

At the W Tax Group, our attorneys help clients stop levies, resolve tax debts, and regain peace of mind. 

Key Takeaways

• You have 30 days to respond to a Final Notice of Intent to Levy before the IRS seizes wages, bank accounts, or other assets.
• Common final levy notices include CP90, LT11, CP297, and CP504
• To stop a levy, you can request a hearing, set up a payment plan, or apply for Offer in Compromise or Hardship Status
• If you disagree with the tax debt, you have the right to appeal and challenge the IRS’s claim

Table of Contents

• What Is a Final Notice of Intent to Levy?
• How Many Notices Before the IRS Levies
• Types of Final Intent to Levy Notices
• Options If You Agree With the Tax Debt
• What to Do If You Disagree With the Notice
• How to Request CAP Appeal
• Which Assets Can the IRS Seize?
• How Our Tax Attorneys Can Help

What Is an IRS Notice of Intent to Levy?

A notice of intent to levy means that the IRS plans to levy your assets. If you don’t respond to the notice within 30 days, the IRS will seize your assets, take the money in your bank account, or garnish your wages. 

Do not ignore this notice. To protect your assets, bank accounts, and wages, you need to contact the IRS to make arrangements to pay your tax debt as soon as possible. Once the IRS starts the levy process, it can be very hard to stop — contact us now if you’re trying to stop a levy.

Defining Intent to Levy

“Intent to levy” means that the IRS is planning to take your property to pay off your tax debt. The word levy refers to the seizure of assets like your wages and bank accounts. When the IRS sends a notice with this phrasing, they’re warning you that they will move forward with asset seizure unless you respond within 30 days. 

How Many Notices Does the IRS Send Before Levy?

Typically, the IRS sends about four notices before it levies your assets. Levy notices are sent by mail, usually via Certified Mail with Return Receipt Requested. The IRS mails the notice to your last known address, and you’re typically required to sign to confirm receipt. Even if you don’t sign or pick it up, the IRS considers the notice delivered if it’s mailed based on these guidelines.

While four or more notices are typical, the number can vary. Legally, the IRS only needs to send two. The law states that the IRS can only levy your property if it sends you a bill and a 30-day notice of intent to levy. 

However, the IRS can levy your assets without sending you a 30-day notice in the following situations:

• If the tax collection is in jeopardy.
• If the IRS wants to levy an IRS or state income tax refund.
• If you have a disqualified employment levy. This applies if you owe employment taxes, and you’ve requested a Collection Due Process hearing on employment taxes in the last two years. 
• If you’re a federal contractor. The IRS can issue federal contractor levies automatically through the Federal Payment Levy Program.

A lot of IRS notices sound threatening, but with the early notices, you still have plenty of time to take action. Once you receive the levy notice, the IRS is serious. If you fail to respond to this notice, the IRS will start seizing your assets. 

Types of Intent to Levy Notices

The IRS sends out several different types of levy notices. In some cases, you may receive a general notice warning you of the IRS’s intent to levy your assets. In other cases, the notice may specifically state the assets the IRS plans to levy. Here are some of the levy notices you may receive:

How to Avoid a Tax Levy — If You Agree With the Tax Debt

If you agree with the tax debt shown on the notice, there are several steps you can take to prevent the levy from moving forward. Here are the main options:

Set Up a Payment Plan

If you owe less than $50,000 in tax, interest, and penalties, you can apply for a monthly payment plan online. As long as you are compliant with filing obligations from other tax periods and can afford to pay off the balance by the collection statute expiration date (generally 10 years after filing), the IRS will generally accept your request. 

If you owe more than $50,000 or can’t pay off the tax bill by the collection statute expiration date, you will have to jump through more hoops to get a payment plan. However, it’s still possible.

Submit an Offer in Compromise

The IRS may be willing to settle your tax debt for less than you owe if you prove that you cannot pay the full balance. To qualify, you have to provide the IRS with detailed information about your income and assets. 

Apply for a Partial Payment Installment Agreement

With a PPIA, the IRS lets you make monthly payments (based on your disposable income and the equity in your assets) until the collection statute expiration date, and then, the IRS settles the remaining amount of the tax debt. You must submit a financial statement when you apply, and if your finances improve while you’re still making payments, the IRS may demand the full balance. 

Request Hardship Status

If you can prove that requiring you to pay the tax debt will cause economic hardship, the IRS will temporarily stop collection actions against you. 

Applying for any of these programs will stop the levy from moving forward as long as you make your request by the 30-day deadline noted in the letter. In most cases, the IRS cannot levy your assets while it is reviewing your request for a relief program.

What to Do If You Disagree With the Notice of IRS Levy

If you disagree with the tax liability or with the proposed levy, you have a few different options. For best results, you should have a tax attorney help with the following:

Request a Collection Due Process

You can appeal the tax liability shown on the notice if you believe that it is incorrect and you haven’t had a chance to appeal yet. You can also appeal the proposed levy. The intent-to-levy notice outlines your right to request a due process hearing. As long as you request the hearing within 30 days of the date on the notice, the IRS will not move forward with the levy.

If you miss the deadline, the IRS will move forward with the levy, but you still have the right to request an equivalent hearing. To appeal, file Form 12153 (Request for a Collection Due Process or Equivalent Hearing) or write a letter with the same information on the form.

Apply for Innocent Spouse Relief

If you believe that the tax liability is due exclusively to your spouse or former spouse’s actions, you can apply for innocent spouse relief. This program has very specific eligibility criteria, but if you qualify, you will only be responsible for your portion of the tax liability. 

Submit an Offer in Compromise

There is also a program called offer in compromise based on doubt as to liability. The application process requires detailed knowledge of the tax code, so you should work with a tax professional. If you qualify, the IRS will reduce your tax debt. 

This is different than a traditional offer in compromise. With the standard program, you prove that you can’t afford to pay the full bill, and the IRS lets you settle. With this variation, the IRS settles the bill when you establish that you’re unlikely to owe the full amount. 

How to Appeal an IRS Tax Levy With a CAP Appeal

In lieu of requesting a CDP hearing, you may want to look into the Collections Appeals Program. CAP lets you challenge IRS collection actions like levies or liens if you don’t agree with them. You’re allowed to appeal one levy and one lien per tax period.

If you disagree with a proposed levy, you can request a managerial review. If the IRS has issued a seizure notice for your home, car, or other property, you must request a review within 10 days.

For bank or wage levies, there’s no formal deadline to appeal. However, if you wait too long, the IRS may carry out the levy before your request is reviewed.

If you disagree with the manager’s decision or if a manager never gets in touch with you, file Form 9423 (Collection Appeals Request). 

Unfortunately, if you don’t agree with the collection appeals decision, you don’t have the right to a further appeal. You only get one chance, which makes it critical to work with a tax professional.

Tax Levy Vs. Federal Tax Lien

A tax lien is a legal claim the IRS places on your property to secure the government’s interest in your assets. It doesn’t take anything from you right away, but it alerts creditors that you owe the IRS. If you sell your property, the IRS may claim the proceeds.

A tax levy, on the other hand, is the actual seizure of your assets. The IRS can take money from your bank account, garnish your wages, or seize property to cover your unpaid taxes. A levy is more immediate and severe than a lien.

What Property Can the IRS Levy?

The IRS can levy almost anything that you own or money that other people pay to you. A few assets and income sources are exempt from tax levies, but the IRS can levy the following:

• Wages, salaries, and commissions — The IRS can issue a continuous levy that stays in place until the balance is paid in full or you make arrangements to stop the levy.
• Dividends and payments on promissory notes — The levy applies to the payments due and the right to future payments as of the date on the levy.
• Bank accounts — The IRS can levy all of the money in your bank account up to the balance of your tax debt, penalties, and interest. Once the bank receives the levy notice, it holds the funds for 21 days. If the funds in your account don’t belong to you, you need to dispute the levy before the 21 days are up. Otherwise, the bank will send the funds to the IRS. 
• Retirement accounts — If you have unpaid taxes, the IRS can levy IRAs, 401(k)s, and other retirement accounts. You will not be subject to early withdrawal penalties, but you may face income tax if these accounts are liquidated to cover tax debts.
• Social Security payments — Through the Federal Payment Levy Program, the IRS can seize up to 15% of Old Age and Survivor’s Social Security benefits. The IRS can also manually levy Social Security payments at a higher rate. Note that the IRS cannot take survivors’ benefits paid to children. 
• Federal vendor payments — If you’re a government vendor for property, goods, or services, the IRS can levy 100% of your payments.
• Homes, cars, and other property — The IRS can even take your home, cars, and other real and personal property.
• Rental income — The IRS can levy rental payments made to you by tenants. This is a common target if you own rental property.
• Stock and Investment Accounts — Beyond dividends and notes, the IRS can also levy brokerage accounts and securities if they hold value.

There are limits to what the IRS can seize. They can’t take unemployment benefits, some annuity or pension payments, service-connected disability benefits, workers’ compensation, or certain public assistance. 

If the IRS levies your wages, it must leave you with a minimum amount of income to cover basic living expenses. This protected amount depends on your filing status, how often you’re paid, and the number of dependents you claim. The IRS must also allow you to keep any income needed to pay court-ordered child support.

Case Study: Final Levy Notices

Jason is a self-employed contractor who fell behind on his taxes for several years. He received a few IRS letters warning him to pay his balance of $28,000, but he didn’t respond or set up a payment plan.

One day, Jason received a CP90 notice: an IRS Final Notice of Intent to Levy and Notice of Your Right to a Hearing. It said he had 30 days to resolve the debt or the IRS would begin seizing his assets.

The IRS was preparing to garnish Jason’s wages, freeze and collect funds from his personal checking account, and levy his truck that he uses for work.

Jason contacted a tax attorney the same day. The attorney requested a Collection Due Process hearing and helped Jason set up a monthly installment agreement. Because he acted within the 30-day window, the levy was paused before any assets were taken.

While this example is theoretical, it reflects how IRS collection actions typically unfold once a Final Notice of Intent to Levy is issued. CP90 means the IRS is about to start taking your money or property. If you act quickly, you may be able to stop the levy by setting up a payment plan, asking for a hearing, or applying for relief.

If you ignore the notice, the IRS can freeze your bank account, take money from your paycheck, or go after other property. The sooner you respond, the more likely you are to keep control of your finances.

Get Help From a Tax Attorney

If you’re facing an IRS tax levy, our tax attorneys can help you. We work closely with our clients to help them avoid IRS levies and find relief for their delinquent tax debt. We can help you apply for penalty relief and find the best resolution option for your tax bill.

To learn more, contact us today. We’ll start with a free consultation so we can learn more about your situation and you can see if we’re the right fit. From there, we’ll work with you to find the best way to resolve your tax debt.