IRS Notice of Intent to Levy: What it Means, What to Do

irs notice of intent to levyWhat Is an Intent to Levy Notice?

An IRS intent to levy notice is a notice the IRS sends if it plans to seize your assets. You usually only get this notice if you have seriously delinquent tax debt that you haven’t tried to resolve. The IRS cannot take your assets unless it sends you this notice.

Under the law, the IRS must take the following steps at least 30 days before seizing any assets:

  • Provide you a written notice of the intent to levy and explain your right to appeal (CP 504 does not have appeal rights)
  • Include an explanation of the reason for the levy, the seizure process, and your options.
  • Deliver the notice personally or send it to your law known address via registered mail.

What Assets Can the IRS Take If You Don’t Pay Your Taxes?

  • Property (cars, homes, personal property)
  • Rights to property
  • Funds in bank accounts
  • Social Security benefits
  • Wages from your employer
  • Contractor or vendor payments due to you
  • Employee travel advances
  • Commissions
  • Retirement benefits
  • Government retirement benefits from the Office of Personnel Management (OPM)

On top of that, the IRS can essentially take anything you own beyond the bare essentials. Remember, the IRS can leave you with nothing.  The IRS provides a table for figuring the amount of income that is exempt from levy. This table applies to wages, salary, and other income. It takes into account your filing status and the total number of exemptions you took on your most recent tax return.

What Notice Does the IRS Send If It Plans to Seize Your Assets?

The IRS sends a variety of different notices and/or letters. These are the most common intent to levy notices:

What Should You Do If You Receive an Intent to Levy Notice?

The fastest way to stop the IRS from seizing your assets is to pay the entire tax debt. Once you make the payment, the IRS instantly stops all collection activities.

However, if you don’t have the entire balance, there are other options. The IRS is usually willing to work with people. In particular, you can apply for an installment agreement or an offer in compromise. Mind you, in many cases, it is in your best interest to work with a licensed tax professional (EA, CPA, Tax Attorney).  Here are some options:

Installment Agreement 

This is when you make monthly payments on your tax debt. These agreements reduce the failure to pay penalty by 50 percent, but the IRS will continue to assess interest. As long as you keep up with your payment agreement, the IRS won’t seize your assets or engage in any other collection activity.

Offer in Compromise 

This is when the IRS agrees to settle your tax debt for less than you owe. As a result, the IRS usually only accepts this type of arrangement if you aren’t able to pay in any other way. In fact, in 2016, only about 43% were accepted.  Once an offer in compromise is accepted and paid, all collection activity stops. However, applying can be complicated so you may want professional help.

CNC Status 

This is also known as a hardship status or Currently Not Collectible status. Basically, you provide a collection information statement to the IRS proving that if the IRS forced you to pay them it would create a financial hardship.

Innocent Spouse Relief

If you believe that your spouse or former spouse is solely responsible for the tax debt, you can look to file Innocent Spouse Relief with the IRS. You need to meet certain qualifications.

What if You Don’t Agree with the Levy Notice?

If you don’t agree with the information on the intent to levy, you can file an appeal. To start, call the number on the notice, but you may want to file an appeal as well. Calling the IRS is not the same as filing an appeal, and remember, you only have 30 days before the IRS takes action.

In some cases, the IRS simply makes mistakes. If you’ve already set up an installment agreement, contact the IRS and make sure that your account reflects that. You may also want to start the appeal process in these cases as well.