Understanding IRS Tax Levies And Garnishments

A lien is a legal claim against your property to secure a tax debt; nothing is taken, but it can affect your credit and your ability to sell or refinance. A levy is the actual seizure of assets, such as garnishing your wages, freezing and taking bank funds, or seizing a refund. If money is already leaving your paycheck or account, you are facing a levy.

A wage garnishment is a continuous levy, so it keeps taking until it is released, the debt is paid, or the collection period expires. Common ways to get it released are demonstrating economic hardship, setting up an installment agreement, or paying the balance. Once the IRS approves release, it issues Form 668-D to your employer, who then stops withholding, usually within a few days.

The Final Notice of Intent to Levy, sent as an LT11 or Letter 1058, is the notice that opens the door to wage and bank levies. It comes with a 30-day deadline to request a Collection Due Process hearing. Filing on time legally pauses most levy action while your appeal is reviewed, which is why this notice is the most important one to act on.

Unlike private creditors, the IRS is not capped at a percentage. A wage levy leaves you only a small exempt amount based on your filing status and number of dependents, and everything above that goes to the IRS each pay period. In practice this can take a large share of your net pay, which is why releasing the levy quickly matters.

A Collection Due Process hearing is your right to appeal a levy after receiving the Final Notice of Intent to Levy. You request it by filing Form 12153 within 30 days of the notice. Filing on time generally pauses levy action while Appeals reviews your case, and it lets you propose alternatives such as an installment agreement or currently not collectible status.

By law, the IRS releases a levy when the debt is paid in full, you enter an installment agreement, you show the levy is causing economic hardship, the levy was issued in error or after the collection period expired, or the value of the seized property exceeds the debt. Economic hardship and an installment agreement are the two most common fast paths to release.

Form 668-D is the Release of Levy the IRS issues once it agrees to lift a levy. The IRS sends it to your employer or bank, which then stops the wage garnishment or releases the frozen funds. Payroll departments and banks typically process the release within a few days of receiving the form.

Possibly. When the IRS levies a bank account, the bank holds the funds for 21 days before sending them to the IRS. That 21-day hold is often the window to get a release in place, for example by showing economic hardship or arranging a payment plan, before the money actually leaves your account. Acting quickly is essential.

A release stops the seizure, but it does not erase the underlying tax debt. Unless you resolve the balance, for example through an installment agreement, currently not collectible status, or an offer in compromise, the IRS can issue a new levy later. Pairing the release with a longer-term resolution is what prevents the garnishment from returning.

When you submit your information, CuraDebt reviews it and, at no cost to you, matches you with an independent tax relief firm suited to your situation; CuraDebt does not contact the IRS or handle the release itself. Because levies are time-sensitive, the matched firm can move quickly on a release and the underlying resolution. Checking your options takes about two minutes with no obligation.