A tax levy is a legal seizure of your assets or property to repay or satisfy an unpaid tax liability. While traditional levies require a collection agency to obtain a court order to move forward with a levy, the IRS can authorize levies to collect delinquent tax balances.

Any property or asset can be levied to fulfill an unpaid tax debt, including your house, vehicles, bank accounts, wages, retirement accounts, rental income, the cash loan value of a life insurance policy, or any other asset.

The IRS cannot seize all of your property and income through a tax levy, as federal law protects certain essential assets to ensure you can maintain basic living standards. This includes leaving you with enough income to provide necessities for yourself and your dependents. 

Some key items exempt from a tax levy include:

• Essential clothing
• Household furniture and appliances
• School books
• Necessary tools for your trade or profession
• Unemployment benefits
• Certain annuity and pension payments
• Judgments granting child support for minor children

For the IRS to issue a levy, three requirements must be satisfied.

1. The IRS sent you at least one (1) Notice and Demand for Payment.
2. The taxpayer has neglected or refused to pay the tax bill
3. The IRS sends you a Final Notice of Intent to Levy and Notice of Your Right To A Hearing (LT11 or LT1058) with a thirty (30) day deadline. 

The IRS can inform you of its intent to levy in several ways, including serving you the notice in person, leaving it at your home or place of employment, or sending it to your last known address through certified or registered mail.

A levy ends when you have fully repaid your federal tax balance, the statute of limitations has ended, or you have the levy removed. If the tax levy creates a financial hardship, you can apply to have it removed and seek other tax relief solutions.

The IRS will not send you an intent to levy via phone call, email, or SMS message. If you receive notice that the IRS is threatening to place a levy on your assets through any of these mediums, it is most likely a scam, and we recommend reporting it to the FTC immediately.

If the IRS has placed an active levy on you, you have the right to appeal and have the levy released. However, your appeal can be denied at any time, so relying on a tax professional is highly recommended for the best possible outcome. 

Other qualifications to have the tax levy removed include: 

• The amount owed has been paid in full.
• The period for collection ended before the IRS issued the levy.
• The release of the levy would allow the taxpayer to pay their tax liability.
• The taxpayer entered into a Fresh Start Initiative program, and the terms of the agreement do not allow the levy to continue.
• The levy creates an economic hardship for the taxpayer.
• Releasing the levy will not hinder the IRS’s ability to collect the amount owed.

If you feel that you already meet one or more of these requirements or believe that the IRS issued a levy in error, you may appeal your case to release it.

Taxpayers are not legally obligated to hire a representative to release a tax levy. However, because tax levies are only applied to a case that has been severely delinquent with the IRS, it is strongly advised to consult with a trusted tax professional when attempting to release or appeal a levy.

The IRS’s ability to release a levy is at its discretion, and levy resolution often requires an expertly built and presented case. While the IRS must comply with many guidelines when considering the release of a tax levy, it is ultimately the taxpayer’s responsibility to accurately present their case.

If you’re facing an IRS tax levy, it is time to take immediate action. The sooner you address your tax debt, the more options you’ll have available and the faster you can regain financial stability.

At TaxRise, our team of tax professionals is here to provide expert assistance with your levy situation and help determine your best path forward. Call 833-419-RISE (7473) or schedule a free consultation today to take the first step toward resolving what the IRS claims you owe.