A tax lien puts the public on notice that you owe the IRS. A tax levy takes your money. The difference is significant, and so is the narrow window taxpayers have to respond before accounts are frozen and wages are diverted.
Receiving a certified letter from the IRS is always stressful, but a Notice of Levy is one of the most serious collection actions the federal government can take. For taxpayers and business owners in the Toledo, Ohio, and Louisville, Kentucky metro areas, understanding how a levy works and when to act is essential to protecting your financial stability.
How an IRS levy targets your assets
An IRS levy means the government has moved from demanding payment to actively seizing property. The IRS does not need a court order to execute this action. Once a levy is authorized, it can reach several types of assets:
- Bank account levies: The IRS can instruct a financial institution to freeze funds in checking, savings, or business accounts. The bank must hold the funds for 21 calendar days before transferring them to the government, creating a critical window to pursue a legal release.
- Wage garnishments: The IRS can require an employer to divert a portion of the taxpayer’s wages continuously until the tax liability is fully satisfied.
- Asset seizures: In more serious cases, the IRS can seize and sell physical property, including real estate, vehicles, and business equipment.
Each of these actions can have immediate and lasting consequences on both personal finances and business operations.
The 30-day window to respond
The IRS must provide advance notice before seizing assets. The agency is required to send a series of notices culminating in a Final Notice of Intent to Levy and Notice of Your Right to a Hearing. Once this final notice is delivered, the taxpayer has 30 days to take action before the IRS proceeds with enforcement.
Two primary options exist during this window:
- Collection Due Process (CDP) hearing: Filing Form 12153 within the 30-day period requests a CDP hearing and automatically suspends most levy actions while the hearing is pending.
- Alternative resolution programs: The IRS is required to release a levy that causes an immediate economic hardship, or when the taxpayer enters an authorized resolution program such as an Installment Agreement or an Offer in Compromise.
Acting within the 30-day window is critical. Once it closes, the IRS can proceed without further notice. If your bank account has been frozen or your wages are being garnished, an experienced tax attorney can evaluate your options and help you pursue a resolution before the situation escalates further.