Form 668-C is not served on the taxpayer. It is served on a third party, such as a bank, employer, or client, that received an earlier IRS levy (Form 668-A, 668-W, or 668-R) and refused to turn over the money. Form 668-C gives that third party a formal five-day final demand. If they still refuse, they can be held personally liable for the amount that should have been surrendered, plus a 50% penalty, under IRC Section 6332.

Why You Might See a Copy

Taxpayers sometimes see a Form 668-C in two situations. First, when their employer or bank disputes a levy, questions whether it applies, or claims the taxpayer no longer works there or no longer banks there, the IRS escalates with Form 668-C. The taxpayer may be copied or hear about it from the levy source. Second, when the taxpayer's own business is on the receiving end as a levy source for someone else's debt, Form 668-C is directed at the business.

The 5-Day Window and the Liability Risk

Per IRM 5.11.2, the levy source has five days from Form 668-C to turn over the property or face enforcement. Enforcement means the United States can sue the third party for the amount of the levy. The 50% penalty under IRC Section 6332(d)(2) applies when the refusal was without reasonable cause.

IRM 5.11.2.2.9 also limits how Form 668-C is delivered. The IRS may serve it in person only when the levy source is at a commercial location. Otherwise it is mailed. A Notice of Federal Tax Lien does not have to be filed first, although the IRS will usually file one if a suit to enforce the levy is likely.

If Your Business Received Form 668-C

Honor the levy on the amount that was actually owed to the taxpayer at the time of the original levy, and do it quickly. If there is a legitimate dispute, such as the funds not actually being owed to the taxpayer or already being paid out, document it in writing to the IRS employee named on the levy. Do not simply ignore Form 668-C. The exposure is on your business, not the taxpayer.

If you've received a Form 668-C against your business, or you're the taxpayer and your levy source is refusing to comply, call us at (813) 229-7100.