An IRS Notice of Levy is a legal seizure of your money or property to pay a tax debt you owe. Unlike a lien, which only stakes a claim, a levy actually takes: the IRS sends the notice to whoever holds your assets — your bank, your employer, a brokerage, the Social Security Administration — and that third party is legally required to hand the money over. By the time this notice reaches you, the IRS has already sent earlier warnings, so the window to act is short but not closed.
Levy vs. Lien
People mix these two up constantly, and the difference changes what you need to do. A federal tax lien is a public notice that the government has a legal claim on your property. It protects the government’s position but doesn’t remove anything from your accounts. A levy goes further: it’s the IRS seizing wages, draining a bank account, or taking physical property to pay the debt.1Internal Revenue Service. What is a Levy A lien says “hands off.” A levy says “we’re taking it.”
What the IRS Can Seize
The IRS has broad authority to reach almost anything you own or have a right to receive. That includes wages, bank and investment accounts, rental income, accounts receivable, the cash value of life insurance, commissions, and dividends.1Internal Revenue Service. What is a Levy Physical property is on the table too: cars, homes, other real estate. How the seizure actually works depends on the asset.
Wages
A wage levy is continuous. Once your employer receives it, every paycheck is affected until the debt is paid or the levy is released.2Internal Revenue Service. Levy You do not lose the entire check. The IRS uses Publication 1494 to calculate an amount that’s exempt based on your filing status, pay frequency, and number of dependents, with a higher exempt figure for taxpayers who are 65 or older or blind.3Internal Revenue Service. Tables for Figuring Amount Exempt From Levy on Wages, Salary, and Other Income Everything above that exempt amount goes to the IRS. The exemption resets each pay period, so the protection continues for as long as the levy is in place.
Bank Accounts
A bank levy works differently. It’s a one-time grab: the bank freezes whatever is in your account on the day it receives the levy, then holds those funds for 21 days before sending them to the IRS. That 21-day hold exists specifically so you can contact the IRS to fix errors or arrange payment.4Internal Revenue Service. Information About Bank Levies Deposits made after the levy date generally aren’t captured, but the IRS can issue another levy on the same account if the balance remains unpaid.
Retirement Accounts
IRAs, 401(k)s, and other retirement accounts can be levied. The one small break: when the IRS pulls from a retirement account, the 10% early withdrawal penalty that normally applies before age 59½ is waived.5Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions You still owe income tax on the distribution.
Social Security and Other Federal Payments
Through the Federal Payment Levy Program, the IRS can take up to 15% of Social Security retirement and survivors benefits automatically.6Social Security Administration. Can My Social Security Benefits Be Garnished or Levied Supplemental Security Income (SSI), lump-sum death benefits, payments to children, and Social Security Disability Insurance are excluded from this automated program, and low-income recipients whose income falls at or below federal poverty guidelines may also be excluded.7Internal Revenue Service. Social Security Benefits Eligible for the Federal Payment Levy Program The same program can also reach federal employee and military retirement pay, federal contractor and vendor payments, travel reimbursements, certain federal salaries, and Medicare provider payments.8Internal Revenue Service. Federal Payment Levy Program
What the IRS Cannot Take
Federal law protects a basic set of necessities from seizure.9Office of the Law Revision Counsel. 26 US Code 6334 – Property Exempt From Levy The main categories:
- Necessary clothing and schoolbooks for you and your family.
- Household furniture, fuel, food, and personal effects up to $6,250 in value, adjusted for inflation.
- Books and tools of your trade or profession, up to $3,125, also inflation-adjusted.
- Unemployment benefits and workers’ compensation, in full.
- Public assistance payments including SSI and needs-based state or local welfare.
- Railroad Retirement Act benefits, Railroad Unemployment Insurance, Medal of Honor special pensions, and certain military retirement annuities.
- A baseline of wages and other income calculated under Publication 1494 tables.
- Undelivered mail and any amount a court has ordered you to pay in child support.
How to Respond Right Now
Do not sit on the notice. Interest and penalties keep running on the balance every day the debt is open, and for bank levies you have only 21 days before the money leaves. Several paths exist, and more than one can be pursued at once.
Request a Collection Due Process Hearing
If you are within 30 days of the LT11 final notice (also called Letter 1058), file Form 12153 with the IRS Independent Office of Appeals to request a Collection Due Process hearing.10Internal Revenue Service. Collection Due Process (CDP) FAQs A timely request pauses levy action while the hearing is pending. At the hearing you can challenge whether the levy is appropriate, dispute the underlying debt if you never had a prior chance to do so, raise spousal defenses, or propose an alternative such as an installment agreement or Offer in Compromise.11Office of the Law Revision Counsel. 26 USC 6330 – Notice and Opportunity for Hearing Before Levy If you disagree with the Appeals decision, you can take it to Tax Court.
If You Missed the 30 Days, Ask for an Equivalent Hearing
Past the 30-day window, you can still file Form 12153 for an Equivalent Hearing within one year of the final notice date.12Taxpayer Advocate Service. Equivalent Hearing (Within 1 Year) It covers the same issues, but it does not stop the levy while the hearing is pending, and you cannot appeal the decision to Tax Court.
Ask for a Release Based on Hardship
The IRS is required by law to release a levy in certain situations: the debt has been paid or has expired, you’ve entered an installment agreement, releasing the levy would help the IRS collect more effectively, or the levy is creating economic hardship.13Office of the Law Revision Counsel. 26 USC 6343 – Authority to Release Levy and Return Property Hardship is the fastest route for most people. If a wage levy prevents you from covering basic living expenses like rent, food, utilities, or transportation to work, the IRS must lift it. Bank levies use a slightly softer standard, where the IRS may release the levy but isn’t strictly required to. Call the number on the levy notice, be ready with detailed financial information, and have the fax number for your employer or bank so the release can be sent quickly.14Internal Revenue Service. What if a Levy is Causing a Hardship
Set Up an Installment Agreement
An installment agreement is one of the most common ways to get a levy released. If you owe $50,000 or less in combined tax, penalties, and interest and have filed all required returns, you can apply online through the IRS payment plan tool. Short-term plans of 180 days or less have no setup fee when applied for online. Long-term plans with direct debit cost $22 to set up online, or $107 by phone or mail, and low-income taxpayers can have the fee waived.15Internal Revenue Service. Payment Plans; Installment Agreements Interest and penalties keep accruing on the remaining balance, so paying more aggressively saves money.
Offer in Compromise
An Offer in Compromise settles the full debt for less than you owe, but the IRS accepts one only when it concludes it cannot collect the full amount within a reasonable time. You submit Form 656 with detailed financial statements (Form 433-A for individuals, Form 433-B for businesses), a $205 application fee, and an initial payment. A lump-sum offer requires 20% upfront and the balance within five months of acceptance. A periodic payment offer requires monthly payments starting with the application and continuing through the review.16Internal Revenue Service. Form 656 Booklet Offer in Compromise Low-income applicants are exempt from the fee and the required payments during consideration. All tax filings and estimated payments must be current before the IRS will look at the offer.
Bring in the Taxpayer Advocate Service
If a levy is causing serious harm and you cannot get anywhere through normal IRS channels, the Taxpayer Advocate Service (TAS) can step in. TAS is an independent organization inside the IRS that helps taxpayers facing economic hardship, systemic delays, or unresponsive handling. If the levy threatens housing, food, utilities, or the ability to get to work, you likely meet TAS criteria.17Taxpayer Advocate Service. Contact Us Reach TAS at 1-877-777-4778 or file Form 911 to open a case.
The Ten-Year Clock
The IRS does not have unlimited time. The Collection Statute Expiration Date gives the government 10 years from the date the tax was assessed to collect. After that, the debt is legally unenforceable and any existing levies must be released.18Taxpayer Advocate Service. Collection Statute Expiration Date (CSED) Some actions pause or extend that clock, including bankruptcy, submitting an Offer in Compromise, or requesting a CDP hearing. Do not assume a debt is close to expiring without checking, because the clock may have been suspended more than once along the way.