Receiving a notice from the IRS, especially regarding potential levies on your wages or assets, can understandably cause stress. It’s crucial to familiarize yourself with the IRS’s procedure leading up to a levy. This insight not only gives you the opportunity to address and potentially resolve tax issues but also to prevent the levy altogether. In 2024, the IRS continues its practice of issuing multiple notices before proceeding with a levy, thus offering ample time to settle any outstanding tax debts. Specifically, the IRS will issue five notices to a taxpayer before proceeding to seize funds from their bank account.

Understanding the IRS Levy Process

The IRS doesn’t just start levying out of the blue. They first send a “Notice and Demand for Payment” that tells you how much you owe. If you don’t take care of this debt, you’ll get more notices: CP501 is a gentle reminder; CP503 is more urgent; and CP504 is a warning that the IRS might start taking some of your federal payments if you don’t pay up.

The most critical notice is the “Notice of Intent to Levy and Notice of Your Right to A Hearing” (LT11 or CP90). This one comes at least 30 days before any levy action is taken. It’s your cue to take action immediately to prevent the levy.

What Does Intent to Levy Mean?

Getting a “Notice of Intent to Levy” means you’re at a crucial point, but it’s also a chance to fix your tax issues. Knowing what the notices mean, taking action quickly, and possibly getting professional help can help you sort things out. The goal is to resolve your tax debt so the IRS doesn’t levy your assets or wages.

What to Do If You Get a “Notice of Intent to Levy”

• Review the Notice Carefully: Make sure the tax debt listed is correct. Sometimes, there are mistakes in the amount owed or the tax years in question.
• Talk to a Tax Professional: This is when having a tax expert by your side can make a huge difference. They can help you understand your rights, suggest ways to solve your tax issues, and might even get you a deal like a payment plan or an offer in compromise.
• Respond Quickly to the IRS: Ignoring the IRS will only make things worse. Show them you’re taking this seriously by responding to their notices. You might need to dispute the debt, ask for more time, or set up a payment plan.

Avoid future IRS levies by:

• Paying Taxes On Time: Always pay your taxes when they’re due. Using the IRS’s Direct Pay makes it easy.
• Making Estimated Tax Payments: If you’re self-employed, pay your taxes every quarter to avoid a big tax bill at the end of the year.
• Keeping Good Records: Detailed records of what you earn, what you spend on deductible expenses, and what taxes you’ve already paid will help make filing your taxes easier and could prevent a levy.

Your Rights and Options

You have the right to appeal the IRS’s decision with a Collection Due Process (CDP) appeal within 30 days of receiving the final notice. This appeal could stop the levy and help you work out a deal with the IRS.

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FAQs About IRS Levies

Q: What triggers an IRS levy?

A: An IRS levy is triggered when there’s an outstanding tax debt that hasn’t been resolved despite repeated notices.

Q: Can I appeal an IRS levy?

A: Yes, you have the right to appeal an IRS levy. You must request a Collection Due Process hearing within 30 days of the final notice.

Q: How can I stop an IRS levy?

A: To stop an IRS levy, you can pay your tax debt in full, set up a payment plan, or prove that the levy causes significant economic hardship.

Q: Does an IRS levy affect my credit score?

A: The levy itself doesn’t impact your credit score, but credit bureaus might receive reports of any tax lien resulting from the levy on property, which could negatively affect your score.