How Many Notices Does the IRS Send Before a Levy?

The Internal Revenue Service (IRS) uses a structured process to inform taxpayers about their tax debts and the potential consequences of non-payment. This process involves a series of escalating notices, each with a distinct purpose. This article clarifies the typical order of these notices a taxpayer may receive before the IRS can initiate a levy action.

Initial Demand for Payment

The IRS begins its collection process by sending a series of notices to inform a taxpayer of a tax debt and request payment. These initial communications serve as demands for payment and are not yet formal notices of intent to levy on all assets. The first such notice is commonly the CP14, which indicates a balance due on a tax account. This notice requests payment and outlines the amount owed, including any penalties and interest.

Following the CP14, if the balance remains unpaid, taxpayers may receive a CP501 notice. This serves as a reminder that a balance is still due. The IRS may then send a CP503 notice, which acts as a second reminder for the unpaid balance. This notice may mention the possibility of a federal tax lien if payment arrangements are not made.

The CP504 notice often follows, serving as a more serious warning. While it is a “Notice of Intent to Levy” as defined by Internal Revenue Code section 6331, it provides specific intent to levy state tax refunds. This notice functions as a final reminder before the IRS proceeds with actions to secure payment, but it does not grant the authority to levy all assets without further due process.

The Final Notice Before Levy

The specific notice that grants the IRS the legal authority to levy a taxpayer’s assets is the Letter 1058 or LT11. This notice is formally titled “Final Notice of Intent to Levy and Notice of Your Right to a Hearing.” It signals the IRS is prepared to seize assets to satisfy an outstanding tax debt.

The Letter 1058 or LT11 informs the taxpayer of the exact amount owed, including penalties and interest. It also outlines the taxpayer’s right to request a Collection Due Process (CDP) hearing. Taxpayers have 30 days from the date of this notice to request a CDP hearing to dispute the levy or propose an alternative resolution.

The IRS cannot levy assets until this final notice has been sent and the 30-day period for requesting a CDP hearing has expired, or the CDP rights have been exhausted. This notice provides an opportunity for taxpayers to engage with the IRS before assets are seized.

Understanding Notice Delivery

The method of delivery for IRS notices varies depending on the stage of the collection process. Initial demand notices, such as the CP14, CP501, and CP503, are sent to the taxpayer via regular mail. These mailings serve as initial alerts and reminders about unpaid tax balances.

In contrast, the Final Notice of Intent to Levy (Letter 1058 or LT11) is sent by certified mail to the taxpayer’s last known address. Certified mail provides proof of mailing and delivery, which is important for legal purposes. The “last known address” is the address shown on the taxpayer’s most recently filed and processed tax return, unless the IRS has received notification of a different address. Maintaining an updated address with the IRS is important to ensure receipt of these time-sensitive communications.

What Happens After Levy Notices

Once the Final Notice of Intent to Levy (Letter 1058 or LT11) has been sent and the 30-day waiting period has passed or Collection Due Process rights have been exhausted, the IRS has the legal authority to proceed with a levy. At this stage, the IRS does not send additional notices to the taxpayer before executing a specific levy. Instead, the IRS sends levy forms directly to the third party holding the taxpayer’s assets.

These forms instruct the third party to turn over funds or property to the IRS. For instance, Form 668-W is used for wage levies, instructing an employer to garnish a portion of an individual’s wages. Form 668-A is used for bank levies, directing a bank to freeze and remit funds from a taxpayer’s account. Other assets, such as accounts receivable or Social Security benefits, can also be subject to levy.

A bank levy on Form 668-A is a one-time seizure, applying only to funds present in the account at the time the levy is received. Conversely, a wage levy on Form 668-W is continuous, remaining in effect until the tax debt is satisfied or the levy is released. The IRS uses these forms to execute its authority to collect the debt, established through the preceding notices.