Few things feel more terrifying than learning the IRS is taking your wages, bank funds, or other assets. Many taxpayers first discover a levy when their paycheck suddenly shrinks — or when their bank freezes their funds.
Under IRC §6331, the IRS has the statutory authority to collect unpaid federal taxes by levy upon a taxpayer’s property and rights to property, including wages, bank accounts, tax refunds, Social Security benefits, and other assets. The IRS, however, must follow strict procedural steps, provide written notice, give you appeal rights, and offer collection alternatives.
This guide explores ways to stop IRS levy.
📘 Reference:
- IRS Publication 594 — The IRS Collection Process
- IRS Publication 1660 — Collection Appeal Rights
- IRS Levy FAQ
What Is an IRS Levy?
A levy is the Internal Revenue Service’s (IRS) legal authority, outlined in IRC §6331, to physically seize a taxpayer’s assets or income to satisfy an outstanding tax debt.
Key Distinction:
- A lien is a legal claim against your property.
- A levy is the actual taking or seizure of that property.
The IRS can seize various assets, including but not limited to:
- Wages and salaries
- Funds in bank accounts (checking/savings)
- Accounts receivable (money owed to you)
- Social Security benefits and retirement distributions
- Payments to vendors
- Business and personal property
Before the IRS can execute a levy, they are legally required to send a series of formal notices, which must be completed in sequential order:
- CP14 (Balance Due)
- CP501 (Reminder)
- CP503 (Important Notice)
- CP504 (Notice of Intent to Levy)
- Letter 1058 or LT11 (Final Notice of Intent to Levy & Notice of Your Right to a Hearing)
The IRS can only proceed with the actual seizure of assets after the final notice has been issued.
📘 Reference: Understanding your IRS notice or letter
How Did This Happen? (Why the IRS Levies Your Income or Accounts)
The IRS executes a levy when less severe collection methods have failed, and they are seeking to force payment. This action is generally triggered by one or more of the following circumstances:
- Outstanding Debt: The IRS has determined you have a confirmed, unpaid tax balance.
- Non-Responsiveness: You have consistently failed to acknowledge or respond to the series of mandatory notices sent by the IRS regarding your balance due.
- No Resolution in Place: You have not entered into or applied for a formal payment solution (such as a structured payment plan).
- Default: You failed to keep up with the terms of a prior payment agreement you had with the IRS.
- Collection Risk Assessment: The IRS classifies your case as presenting a high risk that the tax debt will become uncollectible if immediate action isn’t taken.
- Feasibility: You have identifiable income (wages) or liquid assets (bank accounts) that can be seized.
Remember, while the IRS seeks to collect the money, taxpayers still have rights and opportunities to address the levy.
Types of IRS Levies (And How Dangerous Each One Is)
1️⃣ Wage Garnishment (Continuous Levy)
A wage garnishment, also known as a continuous levy, is one of the most aggressive IRS collection actions.
- Continuous Action: This type of levy is not a one-time event; it remains active and takes money from every single paycheck until the entire tax debt is fully paid.
- Minimal Protection: The IRS can seize all of your wages above a small, legally exempt amount that is calculated based on your filing status and dependents.
- No Further Warnings: Once the Final Notice of Intent to Levy (Letter 1058 or LT11) has been sent, the IRS does not need to issue additional notices before or after the levy begins.
2️⃣ Bank Account Levy (One-Time Event)
A bank levy is a one-time action where the IRS targets the funds currently held in your bank account.
- 21-Day Freeze: When the bank receives the levy notice, it must freeze the funds in your account for 21 calendar days.
- Fund Transfer: After the 21-day holding period, the bank is legally required to send the frozen funds to the IRS.
- Future Deposits: Crucially, any new deposits made after the levy notice was served are not affected. The IRS must issue a brand-new levy notice to seize future funds.
- Action Window: You have those 21 days to contact the IRS and resolve the issue to stop the levy before the money is transferred.
📘 Reference: IRS bank levy overview
3️⃣ Social Security and Federal Payment Levy
The IRS can intercept federal payments through the Federal Payment Levy Program (FPLP):
- Social Security: The IRS can seize a percentage of your Social Security payments.
- Federal Vendor Payments: A percentage of certain payments the government owes to federal contractors or vendors can be taken.
- Federal Retirement: A percentage of federal employee retirement distributions may be seized.
4️⃣ Seizure of Physical Assets (IRC §6331(b))
Under IRC §6331(b), the IRS has the authority to seize and sell any of a taxpayer’s property or rights to property, whether tangible, intangible, real, or personal, to collect a tax debt.
- Targeted Assets: This can include vehicles, business equipment, real estate, and other personal or business property.
- Impact: While uncommon, the seizure of physical assets is considered the most severe and catastrophic collection action the IRS can take.
Can You Stop an IRS Levy? (Yes — Here’s How)
The IRS levy process can be stopped, removed, or reversed — even after it begins.
📌 Request a Collection Due Process (CDP) Hearing (Best Option)
Under IRC §6330, the IRS is legally required to offer you the right to request a Collection Due Process (CDP) hearing before any levy action can be issued.
Requesting this hearing within 30 days of receiving the final notice provides crucial protections:
- Stops Collection: It immediately halts the levy process, preventing the seizure of assets, bank funds, and wage garnishments.
- Resolution Opportunity: It gives you the chance to propose alternative solutions (like an installment agreement) or, in certain circumstances, to challenge the underlying tax liability itself.
- Taxpayer Protection: It safeguards your rights under the Taxpayer Bill of Rights.
- Judicial Review: If you disagree with the determination made during the hearing, you are granted the right to appeal the decision to the U.S. Tax Court.
📘 Reference: CDP information
📌 Request an Equivalent Hearing (If You Missed the 30-Day Deadline)
If you missed the 30-day deadline for a CDP hearing, you can request an Equivalent Hearing.
- Important Difference: Unlike the CDP hearing, the Equivalent Hearing does not automatically stop current or impending levy action.
- Benefit: It still provides an opportunity for you to reach a resolution with the IRS Appeals Office.
📌 Negotiate an Installment Agreement (IA)
If the IRS approves and establishes a formal Installment Agreement, they are required to release any existing levy, unless the terms of the agreement provide for the levy to continue.
📘 Reference: IRS Installment Agreement
📌 Submit an Offer in Compromise (OIC)
An OIC allows you to settle your total tax debt for a lower amount.
- Effect on Levy: Submitting a legitimate OIC usually triggers a temporary pause in IRS collection actions, including levies, while the proposal is being reviewed.
📘 Reference: OIC
📌 Claim Hardship (Currently Not Collectible Status)
If the levy causes economic hardship by making it impossible for you to pay basic, necessary living expenses, you can request Currently Not Collectible (CNC) status. As such, the IRS must release a levy if it is determined to create an economic hardship.
📘 Reference: CNC Status
📌 Appeal Through the Collection Appeals Program (CAP)
CAP provides a mechanism for a fast review of collection actions.
- Benefits: It offers broad discretion for the Appeals Officer and includes options for levy release.
- Guidance: Further details are found in Publication 1660.
📘 Reference: IRS CAP
📌 Prove Substantive Error (The Levy Is Wrong)
The IRS must release a levy immediately if you can prove it was fundamentally incorrect. Grounds for release include:
- The tax liability was already paid.
- You never received the legally required pre-levy notices.
- You are not the person liable for the tax debt.
- The IRS made an incorrect assessment.
- The statute of limitations for collection has expired.
📌 Bankruptcy (Extreme Option)
Filing for bankruptcy generally initiates an automatic stay, which can immediately stop most IRS levies.
- Caveat: This is considered an extreme measure and only applies under specific circumstances governed by bankruptcy law.
Common Mistakes Taxpayers Make Regarding IRS Levies
When facing a potential or active IRS levy, avoiding these common errors is critical to protecting your assets and achieving a favorable resolution:
- Ignoring IRS Notices (The Easiest Path to a Levy): Failing to respond to the mandatory series of IRS notices (CP14, CP504, LT11, etc.) is the most direct way to trigger a levy, as the IRS assumes you are unwilling to cooperate.
- Contacting the IRS Unrepresented: Communicating with the IRS without having professional tax counsel (like a tax attorney) may lead you to unintentionally disclose sensitive financial information that could be used against you or hasten the collection process.
- Agreeing to Unaffordable Payment Plans: Entering into an Installment Agreement (IA) that you cannot realistically afford is a major mistake. Defaulting on a payment plan gives the IRS immediate grounds to reinstate or issue a new levy without further warnings.
- Failing to Document Financial Hardship: The IRS is legally required to release a levy if it creates economic hardship. However, they cannot do this unless you provide thorough and verifiable documentation proving that the levy makes you unable to pay basic living expenses (CNC status).
- Allowing Indefinite Levies on Income/Benefits: Many taxpayers mistakenly allow the IRS to continuously garnish wages or take Social Security benefits. You have legal options, like requesting a CDP hearing or proposing a resolution, that are designed to stop these continuous collection actions.
How a Tax Attorney Stops and Resolves IRS Levies?
An experienced tax attorney serves as your advocate, utilizing specialized knowledge of IRS procedures and legal codes to immediately address and resolve active or impending levies.
Key Actions Your Attorney Can Take:
- Immediate Action: They can often stop wage garnishments and secure levy releases within a short window.
- Appeals & Due Process: They file necessary appeals, including Collection Due Process (CDP) or Collection Appeals Program (CAP), which legally pause collection efforts.
- Legal Challenges: They challenge the IRS on procedural grounds, ensuring the IRS followed every legal step before issuing the levy.
- Financial Resolution:
- Propose Affordable Plans: They negotiate and propose sustainable installment agreements.
- Settle Debt: They prepare and submit Offers in Compromise (OIC) to settle the tax for less than the full amount.
- Prove Hardship: They professionally document and present evidence to prove economic hardship, compelling the IRS to release the levy under Currently Not Collectible (CNC) status.
- Asset Protection: They work to prevent future levies and protect assets from seizure.
Tax counsel is skilled in negotiating with IRS Collections, knowing how to escalate cases and how to force the release of a levy when the law requires it.
Facing an IRS Levy? Immediate Action is Required.
If the IRS is currently taking aggressive action—whether by garnishing your wages, freezing bank accounts, levying Social Security benefits, or threatening asset seizure—you must act immediately.
At Pelham PLLC, we provide rapid, emergency levy defense:
- Stop Levies: We immediately intervene to halt wage garnishments and secure levy releases.
- Negotiate Resolutions: We negotiate affordable payment plans and other long-term solutions.
- Protect Your Future: We file emergency appeals, challenge IRS enforcement, remove penalties, and protect your income and assets.
- Prevent Financial Destruction: Our goal is to keep the IRS from devastating your finances.
Contact Pelham PLLC today for emergency levy defense. We start protecting your income, your assets, and your future immediately.
FAQs
How long does an IRS wage levy last?
Until the tax is paid OR a levy release is issued.
Can a bank levy be reversed?
Yes, within the 21-day hold period.
What if I didn’t receive the levy notice?
The IRS may be required to release the levy.
Does hiring a tax attorney stop a levy?
Often, yes — through expedited relief, appeals, or negotiations.
