An IRS tax levy often comes with additional fees, such as administrative charges and interest payments. Avoid unnecessary expenses by appealing your IRS levy. You will need to determine if you can appeal, find representation, and submit an appeal through the proper channels.
Did you know that, according to data from the Internal Revenue Service (IRS), it collected over $117 billion in unpaid taxes during fiscal year 2025? The data clearly shows that a significant portion of Americans have trouble paying their tax bills, and debt resolution steps are common.
What Is an IRS Tax Levy?
An IRS tax levy is when the IRS takes either your money or other property to satisfy debts owed. Many people confuse an IRS lien with a tax levy; the key difference is that a lien is a claim to collect the debt owed, while the levy is the process of actually securing that debt.
How Much Can the IRS Levy From Your Paycheck?
The amount the IRS can take from your pay depends on factors such as:
- Total pay
- Filing status
- Number of dependents
IRS Publication 1494 breaks down the brackets for income that is exempt from a levy.
It is important to note that the IRS cannot take all of your money. Additionally, you may be able to claim an exemption if you are going through an economic hardship by contacting the IRS.
How Long Does an IRS Levy Last?
The statute of limitations for the IRS to collect funds owed is typically 10 years. After a decade, they no longer have any authority to target your bank account, wages, or other assets.
The levy process timeframe depends on how much you owe and the methods the IRS uses to collect the funds. Wage garnishment, for example, may take significantly longer because it involves taking a designated amount out of every paycheck.
However, if the IRS clears out your bank account, it could resolve the debt quickly with a single payment.
How Can You Appeal an IRS Levy?
If you think a levy is unjust or a mistake, then you need to immediately begin the appeal process. Here are some key steps to take.
Determine if You Meet the Appeal Criteria
You cannot simply file an appeal because you do not want to pay the levy. You need to have a legitimate reason, whether it be clarifying facts or citing tax law to support your argument.
Additionally, you cannot file an appeal if you have already signed an agreement form with the IRS to pay the amount owed.
Determine Representation
While self-representation is permitted in the appeals process, it is not always the ideal solution. Those who are not experts in tax law should consider representation such as a CPA (certified public accountant) or an attorney.
You can also use an enrolled agent who is explicitly authorized to practice before the IRS.
File a Protest
Next, you need to send a formal written protest to the IRS. Usually, you have 30 days from the date of the letter notifying you of funds due or seizure of funds.
Move Forward With Your Appeal Procedure
The type of appeal procedure you choose depends on the specifics of your case. Appeal procedures include:
- Offer in Compromise
- Collection Due Process
- Collection Appeals Program
- Trust Fund Recovery Penalty
Can You Request a Levy Release?
Yes, and there are many valid reasons to secure a levy release during tax dispute procedures. They include:
- You have paid the full amount that you owe to the IRS.
- You are currently experiencing economic hardship, and making payments would cause severe financial stress.
- You have arranged an installment plan to pay off the debt.
- The time frame to collect the funds has expired.
Even if you cannot receive a levy release, there are certain ways around it. Securing the documents for IRS lien subordination, for example, might allow a homeowner to refinance their mortgage while their home is under lien to pay debts.
When a property is at risk, the lender typically wants to act in their best interest to protect it, and that often includes a new mortgage.
Frequently Asked Questions
Can You Go to Prison for Not Paying an IRS Tax Levy?
Generally, no. You cannot go to prison simply for not paying an IRS tax levy. However, this changes if the IRS determines that criminal charges apply to your case.
The key to pressing criminal charges is intent. Tax evasion, for instance, involves purposefully failing to pay taxes owed and can result in prison time.
Failure to file is a possible charge as well and can be associated with unpaid taxes. If an individual intentionally does not file their taxes, then they have not paid any taxes that they will owe when they process the return.
Can the IRS Levy Your Entire Bank Account?
Yes, the IRS has the capability to levy and freeze funds in an entire bank account. The bank will typically freeze the funds immediately when they receive the notice, and it will typically send the money owed to the IRS after a designated period if you do not resolve the issue.
Since the IRS has 10 years to collect unpaid debts, it can levy a bank account an unlimited number of times, depending on whether you still owe money. If you owe $5,000, for instance, and your bank account only has $1,000 in it when levied, the IRS may levy your account again if you do not pay the remaining balance.
What Types of Bank Accounts Cannot Be Levied?
There are certain account types that the IRS cannot touch during the levy process. They include:
- VA pension benefits
- Federal retirement pensions
- Unemployment and other types of welfare
- Federal student aid, such as Pell Grants
- Social Security benefits
Save Time and Money With These Penalty Abatement Tips
Receiving an IRS tax levy does not have to be stressful or expensive. Use this guide to go through the proper appeals process and avoid paying excess fines and fees.
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