What Does IRS Intent to Levy Mean?

A notice from the Internal Revenue Service (IRS) with the phrase “Intent to Levy” is a formal warning that the agency is preparing to seize your assets to cover an unpaid tax debt. This is not the first letter you will receive, but it is the one that precedes direct collection action. Understanding this notice, the assets at risk, and your response options is necessary to protect your property.

Understanding the Notice and the Levy

An “Intent to Levy” notice is a legally required communication before the IRS can take your property. The most direct warning is the “Final Notice of Intent to Levy and Notice of Your Right to a Hearing,” sent as Letter 1058 or LT11. Receiving this letter means the IRS has already assessed a tax liability, sent a bill, and has not received payment. This final notice provides a 30-day window to pay the debt or appeal the collection action.

You may receive other warnings, like a CP504 notice, which applies to your state tax refund. The arrival of Letter 1058 or LT11, however, signals that the IRS is prepared to seize other assets, such as wages or bank accounts.

A levy and a lien are distinct IRS collection tools. A lien is a legal claim against your property that secures the government’s interest and notifies other creditors. A levy is the actual seizure of that property to satisfy the debt. For example, a lien is a claim on your car’s title, while a levy is the act of taking the car.

The final notice is the last step before the IRS can legally begin seizing property. The agency can instruct your employer to garnish wages, order your bank to turn over funds from your accounts, or take possession of physical assets. Immediate action is required to prevent this.

Assets Subject to IRS Levy

The IRS has broad authority to seize assets to satisfy a tax debt. A common target is income through a continuous wage garnishment, where your employer sends a portion of each paycheck to the IRS. This differs from a bank levy, which is a one-time seizure of funds in your account on the day the bank receives the notice.

An IRS levy extends beyond wages and bank accounts to include federal payments like Social Security. The IRS can take up to 15% of monthly Social Security payments under the Federal Payment Levy Program. Retirement accounts, such as a 401(k) or an IRA, are also vulnerable, as is physical property like real estate and vehicles.

Certain assets and income are protected from an IRS levy by federal law. Exemptions include some unemployment benefits, workers’ compensation, and specific public assistance payments. The law also exempts a portion of your weekly income to cover basic living expenses. This amount is based on your filing status and number of dependents, as detailed in IRS Publication 1494.

Your Immediate Response Options

Upon receiving a final notice, you have 30 days to act before the IRS can seize assets. The most direct option is to pay the tax liability in full. Paying the debt will immediately halt the levy process and prevent further collection actions.

If you are unable to pay the full amount, the IRS offers several resolution paths. You can request an Installment Agreement, which is a structured plan to pay your debt over time. Depending on your tax liability, you may be able to set up an agreement online through the IRS website.

Another solution is an Offer in Compromise (OIC), which allows certain taxpayers to resolve their liability for less than the full amount owed. This option is for those with significant financial hardship who can show they cannot pay the full amount. The amount offered must be the most the IRS can expect to collect.

If you face severe economic hardship and cannot afford any payments, you can request Currently Not Collectible (CNC) status. This status temporarily suspends collection efforts until your financial situation improves. To qualify, you must provide financial information to the IRS proving payment would prevent you from meeting basic living expenses.

How to Formally Respond to the Notice

The final notice provides the legal right to a formal hearing to dispute the collection action, known as a Collection Due Process (CDP) hearing. This is your tool for formally requesting a resolution option. To begin this process, you must submit Form 12153, Request for a Collection Due Process or Equivalent Hearing, within the 30-day period on your notice.

On Form 12153, you must provide personal information, identify the tax periods, and state the reason for your request. This is where you propose an alternative to the levy, such as an Installment Agreement or an Offer in Compromise. You should explain why your proposed solution is appropriate based on your financial circumstances.

You must mail the completed Form 12153 to the address listed on your levy notice. Sending the form via certified mail with a return receipt is recommended. This provides proof that you filed your request on time, which is a requirement for the hearing.

Filing a timely CDP hearing request legally pauses the IRS from proceeding with the levy. The IRS cannot seize your assets while your case is considered by the IRS Independent Office of Appeals. This stay on collection remains in effect until a final determination is made, giving you time to negotiate a resolution.