What Is an IRS 147 Notice of Levy and How Do You Respond?
An IRS 147 Notice of Levy is a final collection action. Understand the formal process for responding and the resolution options available through the IRS.
Receiving a notice of levy from the Internal Revenue Service (IRS) is a serious matter that demands your immediate attention. It represents a formal action by the agency to seize assets for an outstanding tax liability.
Understanding the Notice of Levy
A levy is the legal seizure of your property to satisfy an unpaid tax debt. Unlike a lien, which is a claim against your property, a levy is the actual taking of that property. The IRS sends the levy notice to a third party that holds your assets, such as your bank or employer.
This action is a late-stage step in the IRS collections process. Before a levy can be issued, the IRS must send you a Notice and Demand for Payment. If the tax debt remains unpaid, the IRS will later send a “Final Notice of Intent to Levy and Notice of Your Right to a Hearing.”
This final notice provides a 30-day window to either pay the debt or formally appeal before the levy takes effect. The levy notice itself contains your name, the tax period in question, and the total amount owed, including the original tax, penalties, and interest.
A levy on a bank account requires the bank to freeze your funds up to the amount of the levy for 21 days before sending the money to the IRS. A wage levy is continuous, taking a portion of your pay each period until the debt is fully paid.
Responding to the Levy
Upon learning of a levy, you must act quickly. The most direct first step is to contact the IRS immediately using the phone number provided on previous correspondence you received. Prompt communication is the only way to begin working toward a resolution and potentially secure a release of the levy.
An Installment Agreement allows you to make manageable monthly payments over time. Another possibility is an Offer in Compromise (OIC), which allows certain taxpayers to resolve their tax liability with the IRS for a lower amount than what they originally owed, based on their ability to pay. If you can demonstrate that the levy is creating a significant, immediate economic hardship, you can request a levy release.
Proving economic hardship requires providing detailed financial information to the IRS to show that the levy prevents you from meeting basic living expenses. The IRS may release the levy, but this does not eliminate the underlying tax debt. The debt will continue to accrue penalties and interest until it is paid or resolved through another program.