Letter 1058-F is the Collection Due Process notice used when the IRS levies on payments due from the federal government to a contractor. IRC Section 6331(h) authorizes a continuous levy on federal payments, and IRC Section 6330(f) allows the IRS to make a federal contractor levy before offering a hearing. Letter 1058-F provides CDP rights after the levy has taken effect.
The Federal Payment Levy Program
The Federal Payment Levy Program (FPLP) runs through the Treasury Department and intercepts a percentage of payments that federal agencies owe to contractors with unpaid federal taxes. The levy is continuous: it attaches to every payment the agency makes under the contract until the balance is paid or the levy is released. For payments to vendors of property, goods, or services sold or leased to the government, IRC Section 6331(h)(3) allows the levy to reach 100% of each payment.
CDP Timing
The 30-day window to request a CDP hearing runs from the date of Letter 1058-F. File Form 12153 to stop additional levies, preserve Tax Court review, and propose a collection alternative. For federal contractors, demonstrating that the levy is destroying the business's ability to perform the contract (and therefore the IRS's ability to collect at all) is often a persuasive hardship argument.
Release Through Contract Modification
Resolution of a Letter 1058-F sometimes involves a modification to the government contract itself. If the contractor and contracting officer can structure payments that account for the federal tax balance (such as direct payment arrangements), the IRS may release the FPLP levy. This requires coordination among the IRS, the contracting agency, and the contractor.
If a Letter 1058-F has frozen your federal contract payments, call us at (813) 229-7100. These cases often have a path to release that preserves the contract.