IRS Notice Of Intent To Levy: What To Do Before The Deadline

On Behalf of the Law Offices of Sammy Kim

Quick Summary

A Notice of Intent to Levy is a formal warning from the IRS that it plans to seize your assets if you do not take action. This notice comes late in the collection process and gives you a limited window to respond before the IRS can legally take wages, bank funds, or other property. Understanding what the notice means and what you can do after receiving it is essential.

What The Notice Means

The IRS issues a Notice of Intent to Levy, formally called a CP504 or Letter 1058, after prior collection notices have gone unanswered. By this point, the IRS has already assessed the tax, sent a bill, and waited for payment. The levy notice is the final required step before the IRS can enforce collection by seizing property.

Receiving this notice does not mean a levy has already happened. It means one is coming unless you act within the specified timeframe. The Letter 1058 is a final notice that triggers a 30-day window to request a Collection Due Process hearing. The CP504 is a warning that a levy is coming but may not trigger the full CDP right, understanding which notice you received matters for choosing the correct response.

The collection process moves significantly faster after this notice. Acting within the window preserves options that disappear once the IRS begins enforcement.

The 30-Day Window To Request A Hearing

A final Notice of Intent to Levy that includes your right to request a Collection Due Process hearing must be responded to within 30 days of the notice date. This deadline runs from the date on the notice, not the date it was received.

A CDP hearing allows you to challenge the levy, propose an installment agreement, submit an Offer in Compromise, or raise other collection alternatives. The IRS must consider legitimate alternatives to enforced collection before proceeding with a levy when a timely CDP hearing has been requested.

Once the 30-day window closes without a request, the IRS can proceed with the levy. An equivalent hearing is still available after that window, but it does not suspend collection while the hearing is pending. The distinction between a timely CDP request and a late equivalent hearing request is significant for anyone facing enforcement action.

What A Levy Can Reach

The IRS can levy wages, directing your employer to withhold a portion of each paycheck and remit it to the IRS until the tax debt is satisfied. The amount withheld is based on a formula that leaves a minimum exempt amount; the IRS takes the rest.

Bank levies require the financial institution to hold funds in the account for 21 days before sending them to the IRS. This 21-day window exists to allow the taxpayer to demonstrate any error or to resolve the liability, but it closes quickly.

The IRS can also reach accounts receivable for self-employed individuals, business assets, retirement accounts in some circumstances, and federal payments including tax refunds. Social Security benefits can be levied at a reduced rate under a separate program. Understanding what assets are at risk helps in deciding how urgently to act.

Stopping Or Releasing A Levy

A levy can be stopped before it is implemented by entering into an installment agreement, submitting an accepted Offer in Compromise, demonstrating that the levy would create an economic hardship, or paying the liability in full.

If a levy has already been implemented, meaning wages are being withheld or a bank hold has been placed, the IRS will release it when one of these conditions is met. A wage levy can be released prospectively once an installment agreement is in place, though wages already garnished before the release do not come back.

The process of negotiating a resolution while a levy is active requires demonstrating to the IRS that a proposed alternative is financially viable. A Form 433-A or 433-B financial statement is typically required as part of any collection alternative. Having that documentation prepared before approaching the IRS speeds the process.

Why Acting Before Enforcement Matters

Acting before a levy is enforced gives you significantly more options than responding after funds have already been taken. The IRS collection function is more willing to consider alternatives when enforcement has not yet begun. Once a levy is active, the process of getting it released requires demonstrating the same conditions that could have prevented it in the first place, but with less time and more pressure.

The 21-day hold period for bank levies is short, and the window for challenging a wage garnishment closes quickly. Taxpayers who receive a final notice and wait to see what happens often find that the levy has already been implemented by the time they engage an attorney. Getting ahead of enforcement is consistently better than responding to it.

Collection Alternatives Available After Receiving A Levy Notice

A final notice of intent to levy triggers the window to request a CDP hearing, but it also opens the door to formal collection alternatives. During the CDP process, a taxpayer can propose an installment agreement, submit an Offer in Compromise, or demonstrate economic hardship. The IRS must evaluate these alternatives before the levy can proceed when a timely CDP hearing has been requested.

An installment agreement requires the taxpayer to submit a financial statement and agree to a monthly payment schedule that the IRS determines is consistent with the taxpayer’s ability to pay. If the agreement is approved, the IRS will not levy while the agreement is in good standing. An installment agreement that lapses because the taxpayer misses a payment reinstates the IRS’s right to levy without additional notice.

An Offer in Compromise may also be appropriate in cases where the total liability exceeds what the taxpayer can realistically pay from available assets and future income. The OIC process suspends IRS collection while the offer is pending. Submitting an OIC without a defensible collection potential calculation wastes time and reinvites enforcement after the offer is rejected.

Understanding which alternative fits the taxpayer’s situation requires a review of the full financial picture, assets, income, necessary expenses, and the total outstanding liability. The IRS applies specific formulas, and a taxpayer who does not understand what those formulas produce is negotiating blind. Working with a tax attorney on this analysis before approaching the IRS improves the outcome.

Contact A Tax Attorney Immediately

The Law Offices of Sammy Kim responds to IRS levy notices on behalf of individual and business taxpayers. Call now at (703) 202-1005 , the window to request a hearing closes fast, and acting before enforcement begins gives you the most options.