The Notice Requirement
Under Internal Revenue Code Section 6330, the IRS is required to send you a final notice of intent to levy at least 30 days before issuing a levy. This notice — typically Letter 1058, CP90, or LT11 — must be sent to your last known address. It also triggers your right to request a Collection Due Process hearing.
The IRS cannot skip this step. Without the final notice, a levy is generally invalid and can be challenged.
Exceptions to the Notice Rule
There are limited exceptions. The IRS can levy without the 30-day notice in cases involving jeopardy, where the IRS believes the collection of tax is in jeopardy because the taxpayer is about to leave the country, hide assets, or dissipate funds. These situations are rare and require IRS management approval.
The IRS can also levy state tax refunds after sending a CP504, without sending an additional final levy notice. This catches many taxpayers off guard because they assume the CP504 is just another reminder, not realizing it authorizes the IRS to intercept their state refund.
The Difference Between Levy and Lien
A levy and a lien are not the same thing. A lien is a legal claim against your property that secures the government's interest in your tax debt. A levy is the actual seizure of your property or funds. The IRS can file a lien without levying, and the lien gives the IRS priority over other creditors. A levy takes the money out of your account or your paycheck.
What Happens When They Levy
When the IRS levies a bank account, it sends a notice to your bank. The bank freezes the funds in your account up to the amount owed and holds them for 21 days. During that 21-day window, you can contact the IRS to resolve the issue and request a levy release. After 21 days, the bank sends the funds to the IRS.
A wage levy (also called a wage garnishment) works differently. It is continuous, meaning it stays in effect until the debt is paid, the IRS releases it, or the collection statute expires. Your employer must comply and will withhold a significant portion of your paycheck each pay period.
How to Prevent a Levy
The best way to prevent a levy is to respond to IRS notices before they escalate to the final levy notice. Set up an installment agreement, submit an offer in compromise, or request currently not collectible status. Any of these options, if accepted, prevents the IRS from levying. If you have already received the final notice, file Form 12153 requesting a CDP hearing within 30 days. This legally stops the levy while your hearing is pending.
The IRS has enormous power to take your money, but they also have rules they must follow. Knowing those rules is your best defense.