What Is a Tax Levy?

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A tax levy is a process the IRS and local governments use to collect the tax money they're owed. If you don't pay your taxes, the government may try to get the money you owe by garnishing your wages, taking it directly from your bank account, or seizing and selling property you own.

Key Takeaways

  • A tax levy is a legal process that the IRS takes to seize the money you owe in taxes.
  • The IRS can garnish wages, take money from your bank account, seize your property, and more if you fail to pay your tax debt.
  • You can appeal a tax levy and try to get it released, but you will still need to pay the tax debt eventually.
  • To prevent a tax levy, pay your tax bill in full and on time, set up a payment plan with the IRS, or consider an offer in compromise if your current situation means you're unable to afford your tax bill.

How Does a Tax Levy Work?

If you owe money to the IRS, a levy is a way for the IRS to get their money via ways such as seizing assets. Before seizing assets, the IRS will provide plenty of warning. Ideally, you’ll find ways to prevent the tax levy from taking place.

The IRS is required to notify you by mail of any tax that you owe, so be sure to open your mail. Keep your mailing address up-to-date, and communicate with the IRS if you’re having financial problems.

If you receive a document titled "Final Notice of Intent to Levy and Notice of Your Right to a Hearing," a tax levy may be imminent; the IRS could seize the funds or your property in 30 days. At that point, if you aren't communicating with the IRS already, you should contact them.


There are situations in which the IRS may not offer you a hearing before seizing your property. For example, they may not give you a hearing notice if they think the collection of the tax you owe is in jeopardy.

Examples of a Tax Levy

A tax levy is a procedure that the IRS and local governments use to collect money you owe. Tax levies can collect funds in several different ways, including taking funds from your bank account or garnishing your wages. Some of the most common strategies include:

  • Bank levies: The IRS will give you 21 days to contact it to pay your taxes or bring up errors in the levy. After 21 days, the bank must forward the money you owe to the IRS.
  • Wage garnishment: Your employer is required to hold back a portion of your pay and send it to the IRS until your tax debt is satisfied.
  • Property seizure: The IRS can take the property you own (such as a house, boat, or vehicle), sell it, and apply the sales proceeds to your tax debt.
  • Reduced tax refunds: The IRS may hold money that would otherwise come to you via a tax refund. The IRS can levy state and municipal refunds as well as federal refunds so that the state will send funds to the IRS instead of to you.
  • Other options: Taxing authorities can collect money in surprising ways. If you don’t have liquid cash to satisfy tax debts, they may be able to find other forms of value, such as your Social Security benefits or business assets.

Can a Tax Levy Be Released?

It is possible to get a tax levy released. You have the right to appeal the event and prevent a tax levy from moving forward. You can even request that creditors return levied assets to you after the fact.

To complete an appeal, contact the IRS immediately to arrange to pay your tax bill and request a tax levy release.


If you need additional help appealing a tax levy in order to get it released, ask a certified public accountant (CPA), enrolled agent (EA), or local tax attorney how to proceed.

Tax levies are generally released when you pay off your tax debt. But in some situations, you can appeal and have the IRS release a levy for other reasons.

The IRS must release a levy if:

  • You paid the amount you owe.
  • The collections period ended before the levy was issued.
  • You will be able to pay your taxes if the levy is released.
  • You set up an installment agreement and the terms do not allow for the levy to continue.
  • The value of the property is greater than what you owe and releasing the levy wouldn't stop the IRS from collecting the amount owed.

If the tax levy would create an extreme financial hardship for you, the IRS may hold off on collecting. However, as long as the tax debt still exists, you will need to deal with it eventually.

Tax Levy vs. Tax Lien

Tax Levy  Tax Lien
Legal seizure of property or assets  Legal claim against property for future payment 
Not a public record Public record
Should not impact your credit report Will likely impact your credit report

As an alternative to a tax levy, the IRS can also place a tax lien on the property you own. A lien is different from a levy because a lien gives creditors the ability to potentially take and sell your assets at some point in the future. With a levy, the creditor follows through with taking your assets.

Liens give creditors interest in your assets, helping them secure a future payment. For example, there might be a lien on your home, giving the IRS interest in that asset. To create a tax lien, the IRS files documents at local government offices, making a public record of the interest. Because it's a public record, it could impact your credit report. A tax levy is not a public record and should not impact your credit report.

A tax lien may cause problems if you ever want to sell or refinance an asset, because the tax debt may need to be paid or settled before you have free-and-clear control of the asset. Lenders don’t want to get in line behind the IRS, so they’re typically reluctant to approve a loan on a property with outstanding liens.

How To Prevent a Tax Levy

There are methods you can employ to limit the chance of having a tax levy placed on your assets. If you can’t prove that the levy is unfair, or you aren't able to pay your tax bill immediately, you may still be able to prevent a levy by contacting the IRS and working out an alternative arrangement.

Pay Your Tax Bill Over Time

You don’t always have to pay your full tax bill in April. If you’ve fallen on hard times, it may be possible to set up a payment plan with the IRS that allows you to pay taxes over a more extended period.

You may still owe interest and penalties, but formalizing an installment plan with the IRS prevents them from assuming that you simply decided not to pay.

Make an Offer

You can also negotiate and try to settle your tax debts with the IRS. An offer in compromise allows you to show that you’d be unable to pay what you owe, given your income, expenses, and assets. If successful, the IRS will allow you to pay less than your full tax bill.

Frequently Asked Questions (FAQs)

How do I remove a tax levy?

To remove a tax levy, you'll need to contact the IRS and ask for the levy to be released. If the IRS denies your request, you can appeal, whether or not the IRS has already placed a levy on your property. The IRS has to remove a tax levy if any of the following apply:

  • You paid your debt to the IRS in full.
  • The period for collection had already ended when the levy was issued.
  • Removing the levy will help you pay your taxes.
  • You have an installment agreement with the IRS, and the terms of the agreement do not permit a levy on your property.
  • You can prove to the IRS that the levy keeps you from paying for basic, reasonable living expenses.
  • The property is worth more than your debt and releasing the levy will not keep the IRS from collecting the money you owe them.

How do I know if I have a tax levy?

The IRS will only levy your property if you ignore IRS billing notices and do not pay your taxes. It will also notify you by sending you the "Final Notice, Notice of Intent to Levy and Your Right to a Hearing" document. If you receive the final notice, contact the IRS by calling the number on your billing notice. If you are worried that you may have missed the notice, you can call the IRS at 1-800-829-1040, or 1-800-829-4933 for businesses.

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  1. IRS. "What Is a Levy?"

  2. IRS. “Publication 594: The IRS Collection Process.” Page 6.

  3. IRS. “Information About Bank Levies.”

  4. IRS. "Understanding Your CP504 Notice."

  5. IRS. "How Do I Get a Levy Released?"

  6. IRS. “How Do I Get a Levy Released?

  7. IRS. “What's the Difference Between a Levy and a Lien?

  8. IRS. “Guidelines for Processing Notice of Federal Tax Lien Documents.” Pages 3, 6.

  9. IRS. “How Do I Avoid a Levy?

  10. IRS. “Offer in Compromise.”

  11. IRS. "How Do I Get a Levy Released?"

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