A levy is a legal seizure of your property to satisfy a tax debt. Levies are different from liens. A lien is a legal claim against property to secure payment of the tax debt, while a levy actually takes the property to satisfy the tax debt.
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A levy is an IRS enforced collection action. When the IRS levies you, the IRS seizes (takes) your income or property to pay a tax debt.
This is different from a tax lien, which doesn’t take your property, but secures rights to it.
There are three requirements for a levy:
- Notice and demand for payment
- Notice of intent to levy, and
- Notice of a right to a Collection Due Process (CDP) hearing
The IRS issues most levies after it has made several attempts to collect the taxes with a series of notices. Thirty days after the Final Notice of Intent to Levy (Letter 1058 or LT11 notice), the IRS can seize your property.
The IRS sends most levies to employers to garnish wages until the tax has been paid or you make other payment arrangements to pay. The IRS also commonly levies bank accounts. The IRS can also levy other income sources, such as Social Security payments.
The best way to avoid a levy is to get into a payment agreement with the IRS if you owe back taxes.
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Related tax terms
Collection Due Process Hearing
Related IRS notices
IRS Letter 1058 or LT11 - Final Notice of Intent to Levy
IRS Notice CP504 - Intent to Levy State Tax Refund or Other Property
IRS Notice CP523 - Intent to Levy & Intent to Terminate Your Installment Agreement
IRS Notice CP90 - Final Notice of Intent to Levy and Your Right to a Hearing
IRS Notice CP91 - Final Notice Before Levy on Social Security Benefits