Facing an IRS levy can be an intimidating experience. However, understanding the process and knowing how to react can significantly mitigate the stress and financial strain associated with it. In this post, we will delve into the number of notices the IRS sends before levy, whether the IRS will notify you before they levy your bank account, and the time it takes for the IRS to process a levy. Additionally, we’ll provide actionable steps to help you navigate this situation effectively.

The IRS typically sends several notices before they resort to a levy, a legal seizure of your property to satisfy a tax debt. In essence, you’ll receive up to five notices before the IRS implements a levy: 

  1. CP 14 Notice Balance Due
  2. CP 501 Notice Reminder, We Show You Still Owe
  3. CP 503 Notice Important – Immediate Action Required
  4. CP 504 Notice Urgent Notice – We Intend to Levy on Certain Assets, Please Respond Now
  5. CP 90/CP 297 Notice Final Notice of Intent to Levy and Notice of Your Right to a Hearing

The first notice you’ll receive is the Notice and Demand for Payment. If you ignore this notice, and the subsequent, or fail to pay, the IRS will then send a Final Notice of Intent to Levy and Notice of Your Right to A Hearing at least 30 days before the levy. The levy can target various assets, including your bank accounts, wages, and property. It is essential to remember that the IRS will not levy your property without prior notice.

Now that you understand the notification process let’s discuss the time it takes for the IRS to process a levy. The exact timeline can vary based on multiple factors, but generally, the IRS can levy your bank account or wages 30 days after sending the Final Notice of Intent to Levy. This 30-day period is your opportunity to make payment arrangements or challenge the levy.

Here are actionable steps you can follow to handle an IRS levy effectively:

 

  1. Prompt Response: Act swiftly upon receiving any IRS notice. Ignoring these notices will not make the problem go away; it will only escalate it.
  2. Understand the Notice: Carefully read the notice to understand your tax liability. If you have difficulties interpreting it, consider seeking professional help.
  3. Review Your Finances: Examine your financial situation to determine your ability to pay the outstanding tax debt. Consider all available resources and assets.
  4. Negotiate Payment Options: If you cannot pay the full amount immediately, you can negotiate payment options with the IRS. Options may include an Installment Agreement, where you pay your tax debt over time, or an Offer in Compromise, where you settle your tax debt for less than the full amount you owe.
  5. Engage a Tax Professional: If the tax debt is significant or the process seems overwhelming, consider hiring a tax professional to assist you. They can provide guidance, negotiate on your behalf, and ensure you understand your rights and options.
  6. File an Appeal: If you believe the IRS levy is incorrect, you have the right to file an appeal within 30 days of receiving the Final Notice of Intent to Levy.

Dealing with an IRS levy doesn’t have to be a daunting experience. By understanding the process and taking proactive steps, you can manage the situation effectively and minimize its impact on your financial well-being. Remember that the key to resolving an IRS levy is proactive and open communication with the IRS or with a qualified tax professional.

 

Disclaimer: The information provided in this blog post is for informational purposes only and should not be considered legal, financial, or tax advice. For personalized advice regarding your specific tax situation, consult with a qualified tax professional or contact the IRS directly.