Levy (Bank / Wage)
Definition
A levy is the IRS's legal seizure of property or rights to property — including bank accounts and wages — to satisfy an unpaid tax debt after notice and demand requirements have been satisfied.
Why This Matters for Tax Relief
A levy is the IRS's most aggressive collection action and represents the final step in a structured collection process. Before levying, the IRS must issue a Final Notice of Intent to Levy and Notice of Your Right to a Hearing (Letter 1058 or LT11), providing 30 days to respond. A bank levy is a one-time seizure — the IRS seizes funds in the account on the day the levy is served. A wage garnishment (continuous levy) captures a portion of each paycheck until the debt is paid in full. The exempt amount is determined by Publication 1494 tables, leaving only a minimal amount for basic living. Under IRC § 6343, levies must be released if: the liability is satisfied, the CSED expires, the levy is creating economic hardship, or the taxpayer enters an installment agreement or has an offer pending.
2026 Update
In 2026, the IRS has expanded its digital levy capabilities. Financial institutions now receive levy notices electronically, reducing the processing time before funds are frozen. Early intervention — within the 30-day CDP window — remains the most effective defense.
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Related Terms
CSED (Collection Statute Expiration Date)
The CSED is the expiration date on the IRS's legal authority to collect a tax debt — generally 10 years from the date of assessment under IRC § 6502.
Currently Not Collectible (CNC)
Currently Not Collectible is an IRS status that may temporarily suspend active collection enforcement when a taxpayer demonstrates inability to pay after allowable living expenses. Subject to IRS discretion.
Federal Tax Lien (FTL)
A Federal Tax Lien is a legal claim by the U.S. government against all of a taxpayer's current and future property when a tax debt is assessed, notice is given, and payment is demanded but not made.