IRS Levies: What Gets Seized, Notices, and How to Stop Them

In a federal tax levy, the IRS can seize almost any property you own or have a right to receive: wages, bank balances, independent contractor payments, retirement accounts, Social Security benefits, business receivables, vehicles, and even real estate including your home. Federal law carves out a short list of protected items, and for 2026 that list shields all necessary clothing and schoolbooks, up to $11,980 in household goods, up to $5,990 in tools of your trade, a portion of each paycheck, and several categories of benefits like unemployment, workers’ compensation, VA disability, and public assistance.¹ Everything else is fair game once the IRS has followed its notice process.

Levy Is Seizure, Not a Lien

A lien is a legal claim that puts the IRS ahead of other creditors on your property. It doesn’t take anything. A levy is the actual seizure: money pulled from your account, wages diverted from your paycheck, or assets taken and sold to pay the debt.² If you’re trying to figure out what the IRS can take, you’re asking about levies.

The statute is broad on purpose. It authorizes the IRS to seize “all property and rights to property” of a taxpayer who neglects or refuses to pay, subject only to the specific exemptions Congress wrote into the tax code.² In practice, the IRS goes after the easiest targets first, meaning liquid assets, and only reaches for physical property when it has to.

Wages and Paychecks

A wage levy is continuous. Once the IRS serves Form 668-W on your employer, a portion of every paycheck is withheld and sent to the IRS until the debt is paid or the levy is released.³ Your employer uses IRS Publication 1494 to calculate the amount of pay that stays with you, based on the standard deduction and the number of dependents you claim. Everything above that exempt figure goes to the IRS.⁴

1099 and Contractor Payments

If you’re self-employed, the IRS can reach the money your clients owe you. A levy on a contractor payment using Form 668-A generally captures only what is owed at the moment the levy is served, not future invoices from the same client. The IRS can, and often does, issue new levies as more payments come due.³

Bank Accounts

A bank levy is a one-time snapshot. When the IRS serves the levy, the bank freezes whatever is in the account at that moment and holds those funds for 21 calendar days before sending them to the IRS.⁵ Deposits made after the levy is served aren’t captured, though the IRS can issue another levy later. That 21-day window exists so ownership disputes can be sorted out before the money leaves the bank, and it is the time to act if the levy is wrong.

Joint accounts are not shielded by the fact that the co-owner doesn’t owe taxes. The IRS treats every dollar in a joint account as available to pay the debt, no matter who deposited it. A non-liable co-owner can ask for a partial release by proving which funds are theirs, but that takes documentation and quick action inside the 21 days.

Retirement Accounts

401(k) plans, IRAs, and other retirement accounts are within the IRS’s reach. There is one small break: when a levy forces a distribution to satisfy a tax debt, the 10% early withdrawal penalty that normally applies before age 59½ doesn’t apply.⁶ Regular income tax on the distribution still applies.

Social Security Benefits

Social Security retirement benefits are levied through the Federal Payment Levy Program at a flat 15% of each monthly payment. The 15% applies even if the remaining benefit falls below $750, and the IRS sends notice at least 30 days before deductions start.⁷

Several Social Security payments are excluded from the program: Supplemental Security Income, lump-sum death benefits, benefits paid to children, and Social Security disability insurance. Taxpayers with income at or below federal poverty guidelines may also be excluded.⁷

Real Estate and Your Home

The IRS can seize and sell real property, and that includes a principal residence. Home seizure has an extra procedural gate: it requires written approval from a federal district court judge or magistrate.⁸ The IRS uses this authority selectively, generally when the debt is large and other collection methods have failed, but the power exists.

What the IRS Cannot Take

Federal law lists categories of property the IRS may not levy, and these federal exemptions override any state protections.⁹ For 2026, the protected items are:

All necessary clothing and school books for you and your family, with no dollar cap.
Household goods, furniture, food, and fuel, exempt up to $11,980 in total value.¹
Books, tools, and equipment necessary for your trade or business, exempt up to $5,990 in total value.¹
A portion of your wages calculated under Publication 1494 based on filing status and dependents.¹⁰
Unemployment benefits.
Workers’ compensation.
Service-connected VA disability compensation.
Public assistance payments.
Income needed to meet a court-ordered child support obligation.
Railroad Retirement Act and Railroad Unemployment Insurance Act payments, and military Medal of Honor pensions.
Undelivered mail.

One thing worth noting about Social Security: the protection from creditors that Social Security carries in other contexts does not restrict the IRS’s levy power. The exemption list above is the whole story for federal tax debt.⁹

The Notices That Come First

The IRS cannot seize anything without following a required notice sequence, so a levy is rarely a surprise. A Notice and Demand for Payment comes first. If the balance isn’t paid within 10 days, the IRS gains statutory levy authority, though it usually sends more reminders before acting.²

Before an actual seizure, the IRS must send a separate written notice of your right to a Collection Due Process (CDP) hearing. This notice, usually Letter 1058 or LT-11, must be delivered at least 30 days before the first levy, in person, at your home or workplace, or by certified or registered mail to your last known address.¹¹ An earlier CP504 notice warns of the IRS’s intent to levy but does not by itself authorize seizure of most property and does not grant CDP rights.¹² The Letter 1058 or LT-11 is the one that starts the 30-day clock.

How to Stop a Levy

Paying in full ends a levy immediately. When that isn’t possible, several legal mechanisms can pause or release it.

Request a CDP Hearing

File Form 12153 within 30 days of the date on Letter 1058 or LT-11. A timely request automatically suspends levy authority for the entire hearing and any appeal.¹¹ The hearing lets you challenge whether you owe the tax, raise defenses like innocent spouse relief, or propose an alternative to collection.

Missing the 30 days doesn’t end things, but the equivalent hearing that remains available carries two costs: the IRS is not required to hold off on levies while it is pending, and you lose the right to take the outcome to Tax Court.¹³

Installment Agreement or Offer in Compromise

The IRS is prohibited by statute from levying while an installment agreement request is under review, while an agreement is in effect, and for 30 days after one is rejected or terminated. The same protection covers a pending offer in compromise and the 30 days after rejection.² Filing before a levy hits is far more effective than filing after.

Economic Hardship Release

If a levy is preventing you from paying for basic necessities like food, rent, utilities, or medical care, the IRS is required by law to release it. The statute uses “shall,” which leaves no discretion once economic hardship is established.¹⁴ Expect to submit detailed financial information, usually on Form 433-A covering income, expenses, and assets.¹⁵ After a hardship release, accounts are often placed in Currently Not Collectible status, which pauses collection but does not erase the debt.¹⁶

Wait Out the Collection Statute

The IRS generally has 10 years from the date tax is assessed to collect. This is the Collection Statute Expiration Date, and once it passes, levy authority for that year ends. Many common steps suspend the clock, though, including installment agreement requests, offers in compromise, CDP hearings, bankruptcy, and innocent spouse claims. The 10 years is real, but it runs slower than most taxpayers expect.¹⁷

Taxpayer Advocate Service

When normal IRS channels aren’t working and a levy is causing serious harm, such as risk of losing your home or inability to cover food, transportation, or medical care, the Taxpayer Advocate Service can step in. TAS operates independently within the IRS. File Form 911 by mail, fax, or email, or call 1-877-777-4778.¹⁸

1
Internal Revenue Service. Revenue Procedure 2025-32
2
Office of the Law Revision Counsel. 26 USC 6331 – Levy and Distraint
3
Internal Revenue Service. What if I Get a Levy Against One of My Employees, Vendors, Customers or Other Third Parties
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Internal Revenue Service. Information About Wage Levies
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eCFR. 26 CFR 301.6332-3 – The 21-Day Holding Period Applicable to Property Held by Banks
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Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
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Internal Revenue Service. Social Security Benefits Eligible for the Federal Payment Levy Program
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eCFR. 26 CFR 301.6334-1 – Property Exempt from Levy
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Office of the Law Revision Counsel. 26 USC 6334 – Property Exempt from Levy
10
Internal Revenue Service. Publication 1494 – Tables for Figuring Amount Exempt from Levy on Wages, Salary, and Other Income
11
Office of the Law Revision Counsel. 26 USC 6330 – Notice and Opportunity for Hearing Before Levy
12
Internal Revenue Service. Understanding Your CP504 Notice
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Taxpayer Advocate Service. Form 12153 Taxpayer Requests CDP Equivalent Hearing or CAP
14
Office of the Law Revision Counsel. 26 USC 6343 – Authority to Release Levy and Return Property
15
Internal Revenue Service. What if a Levy Is Causing a Hardship
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Internal Revenue Service. Temporarily Delay the Collection Process
17
Internal Revenue Service. Time IRS Can Collect Tax
18
Taxpayer Advocate Service. Contact Us