What Is an IRS Form 668-A (ICS) Notice of Levy?

Receiving a Form 668-A(ICS), Notice of Levy, from the Internal Revenue Service (IRS) is a legal authorization to seize your assets to satisfy an outstanding tax debt. This notice indicates that previous IRS attempts to collect the debt have been unsuccessful and the agency has escalated its collection actions. The form is sent to third parties that hold your assets, such as a bank, instructing them to turn over your property to the government.

Understanding the Notice of Levy

The issuance of a Form 668-A(ICS) is a consequence of an unpaid tax debt that has remained delinquent despite prior notifications. Before a levy is issued, the IRS must send a “Final Notice of Intent to Levy and Notice of Your Right to a Hearing.” If you do not respond to this final notice within 30 days, the IRS can proceed with a levy, which is the legal seizure of property. This action is distinct from a lien, which is a claim against your property to secure a debt.

Form 668-A targets assets like funds in bank accounts, accounts receivable, or the cash value of a life insurance policy. When a bank receives this notice, it must freeze funds in your account up to the amount of the tax debt. These funds are held for a 21-day period before being sent to the IRS, providing a window to address the situation. This levy is a one-time action, capturing only the funds available when the levy is received.

Information Required to Respond

To address a Form 668-A levy, you must provide the IRS with a detailed picture of your financial situation using a Collection Information Statement, either Form 433-A for individuals or Form 433-B for businesses. This information allows the IRS to determine your ability to pay and evaluate your eligibility for resolution options. You will need to assemble documents that verify your income, expenses, assets, and liabilities.

• Recent pay stubs for the last three months
• Statements for all bank, investment, and retirement accounts
• Mortgage or rent statements
• Recent utility bills and car loan statements
• Records of other recurring monthly payments, such as court-ordered child support
• Copies of your last filed federal tax returns

A complete and well-documented financial statement is necessary to negotiate an outcome other than the continuation of the levy.

Procedural Steps for Resolving the Levy

After preparing your financial documents, contact the IRS at the phone number on the Form 668-A notice. You will speak with an agent from the Automated Collection System (ACS) or a Revenue Officer and may need to submit your financial information to propose an alternative solution.

An Installment Agreement allows you to make monthly payments over time. You can request this by filing Form 9465, Installment Agreement Request, or by applying through the IRS’s Online Payment Agreement tool. The terms of the agreement are based on the ability to pay shown in your financial disclosure.

An Offer in Compromise (OIC) may allow you to resolve your tax liability for less than the full amount owed, often when there is doubt as to collectibility. To apply, you must submit Form 656, Offer in Compromise, along with Form 433-A (OIC) or Form 433-B (OIC). The IRS charges a non-refundable application fee, and you must be current with all tax filing and payment requirements.

For those facing severe economic hardship, requesting Currently Not Collectible (CNC) status is another option. This temporarily suspends collection activity, though the debt continues to accrue interest and penalties.

Calculating Levy Exemptions

While Form 668-A is a one-time levy on assets like bank accounts, the IRS can also issue a continuous levy against wages or salary using Form 668-W. For this type of wage levy, federal law provides an exempt amount that you are allowed to keep for basic living expenses. This exempt amount is not a flat figure but is calculated based on your filing status and the number of dependents you claim.

Employers use the tables in IRS Publication 1494 to determine the correct amount to withhold from a paycheck. To ensure the correct exemption is calculated, you must complete the statement of dependents and filing status that accompanies the wage levy notice and return it to your employer. If you fail to do so, the exemption will be calculated as if you were married filing separately with no dependents, resulting in a larger garnishment.