IRS Form 8519: What To Do If You Receive a Notice of Levy

IRS Form 8519 is the Taxpayer’s Copy of Notice of Levy. The IRS sends this form to a taxpayer seven days after is has sent a levy notice — typically Form 668-A — to the taxpayer’s bank or other financial institution instructing the bank to remit the taxpayer’s funds up to the levy amount to the IRS after a 21-day freeze period.

The IRS sends Form 8519 to the taxpayer to make sure that they know about the bank levy.

Here is a sample Form 8519 that the IRS issued to one our clients for over $300,000.

Note that while we refer to “your bank” throughout this article, the IRS can levy other bank-like institutions, including PayPal.

IRS Form 8519 At a Glance

IRS Form 8519 Explained, Part by Part

Here is a full explanation of the Form 8519, part by part.

Part 1: Taxpayer, IRS, and Bank Information

At the very top of the Form 8519, you’ll see a box with four quadrants containing some basic information about yourself and your bank:

This section of the Form 8519 is fairly basic, but the IRS is known to make mistakes, so be sure to review this section for accuracy.

Part 2: Special Instructions For Certain Property Levied

Below the box at the top, you’ll see a box reserved for any special instructions the IRS has for your bank regarding the property levied.

While this box will be blank for the common bank levy, there are certain assets that may be subject to special instructions.

For example, if the IRS is attempting to levy an inherited IRA, it instructs its employees to include these instructions for the financial institution in this box:

“This Notice of Levy attaches to an inherited IRA that is subject to levy, thus not considered to be retirement funds. You are hereby notified that the property and rights to property described below are subject to tax lien provided by IRC 6321 of the Internal Revenue Code for unpaid income taxes owed by the [Name of Decedent], using the Decedent’s Tax Identification Number [Decedent’s TIN]. Said property and rights to property are hereby levied upon and seized for satisfaction of the aforesaid tax, together with all additions as provided by law. Demand is hereby made upon you to turn over said property and rights to property, or if less, the full amount of the unpaid tax liability specified above.”

Part 3: Amount Due by Year

In the next section of the Form 8519, you will see a chart with your balance by year, which is then summed at the bottom right as your “Total Amount Due.”

Here is a quick legend on each of the column’s you’ll see for each tax year:

• Kind of Tax: This is the type of tax form you filed (or for which the IRS filed a substitute for return) giving rise to the balance due.
• Tax Period Ended: This is the last month of the tax period — typically a year but in some cases a quarter — for which you have a balance due. The format is typically YYYYMM, so in the example above, “201112” means the tax period ended in December 2011.
• Unpaid Balance of Assessment: This is your current assessed balance — including the underlying tax liability plus assessed penalties and interest — for the year.
• Statutory Additions: This is the amount of any accrued but unassessed penalties and interest for the year.
• Total: This is the sum of the previous two columns.

Below this section, the IRS also informs you of the date in the future through which the IRS has calculated your penalties and interest for purposes of the “Total Amount Due.”

Part 4: Warning to Taxpayer

Next, the IRS informs you why it is taking this action against you, namely, because it has previously told you to pay the amount you owe but you have not.

The IRS also warns you that it will send other levies if your amount owed is not satisfied with this one.

Keep in mind that a bank levy is not continuous — the IRS can only take up to the lesser of your total amount owed or the amount in your account when the levy was served to your bank.

Part 5: Levy Information

Next, in bold, the IRS provides you with important information about IRS bank levies.

Here are the key points:

• Your bank must hold your money for 21 calendar days before sending the money to the IRS. This is a crucial period because in it you can still negotiate with the IRS to potentially get the levy released — more on that later in this article.
• After the 21-day freeze period, if you have not been able to get the levy released, your bank must remit to the IRS not only the amount of money in your account on the day the levy was served but also any interest accrued on that amount.
• The IRS may (or may have already) sent levy notices to others.
• The levy for which this Form 8519 pertains does not attach to retirement plans (note that this generally does not apply to funds in inherited retirement plans).

Part 6: How to Pay

Next, the IRS tells you how to make payment to the IRS if you want to pay off your balance.

It instructs you to bring a guaranteed payment (such as cash, cashier’s check, certified check, or money order) along with this Form 8519 to the nearest IRS office to make payment.

While it doesn’t say it here — for reasons God only knows — later in the Form 8519 it says you must make an appointment at the office before bringing in your payment.

Why does it instruct you to make payment in person in a world where electronic payments and other not-in-person methods of payment exist?

The answer is because if you utilize some other means to pay other than going down to your local IRS office, the IRS may not have time to cancel the levy before the bank complies with it.

Part 7: Erroneous Levy

Next, the IRS informs you that if it has erroneously levied your bank account, it will reimburse you for any fees your bank charged you as a result of the levy.

To get this reimbursement process started, you must file a claim with the IRS using Form 8546 within one year after the fees are charged.

Part 8: If You Have Any Questions

Then the IRS instructs you to call or write them with any questions about your levy or if you want to arrange payment before other levies are issued.

It reminds you to include your telephone number and the best time to call if you choose to correspond with the IRS through the mail.

Part 9: How to Find the Closest IRS Office

Remember how earlier the IRS told you that if you want to pay what you owe to take a guaranteed form of payment to the nearest IRS office?

Well, here are your instructions on how to find the nearest IRS office: visit IRS.gov.

Oh, and here it tells you that you will need to make an appointment with that office in order to make a payment.

Part 10: Signature of IRS Representative

Next, you’ll see the signature of the IRS representative authorizing this levy action; IRS employees must reach a certain level within the government before they can sign off on levy action.

When the IRS Sends Form 8519

The IRS sends you Form 8519 seven days after it has issued a levy notice to your bank to make sure that you are aware of the levy.

What You Should Do If You Receive a Form 8519

If you’ve been hit with a bank levy, and you’re still in that 21-day period, here is what you should do.

Step 1: Figure out how much was actually levied.

If when the levy hit your bank, you only had $7.50 in your account, you don’t really have to freak out.

You should deal with your tax issue as quickly as possible because the IRS could certainly levy you again, but if there’s no continuous levy going on right now, the IRS is going to get that $7.50 after those 21 days, but there’s not this sense of urgency in fixing this issue within the 21 days because if you don’t reach a resolution with the IRS within the 21 days, all the levy would grab is just $7.50.

Step 2: Get your bank’s fax number.

Assuming that there’s a material amount in your bank account on the date the bank was hit with the levy, you want to move quickly with getting the levy released.

And before you actually interface with the IRS, I would recommend that you get the fax number of your bank — if it’s a big bank, figure out what the appropriate department is in your bank that handles IRS levies and ideally a specific person at your bank who can be your point of contact here and get their phone number and their fax number.

And the fax number is important because once you get the levy released by the IRS — assuming you get it released — I want you to be able to give the IRS the fax number of this individual so that instead of mailing the release, they can fax it directly to them.

Step 3: Determine your plan of action.

Now, figure out how you’re going to get the levy released.  Read on for how to do that.

6 Ways to Get an IRS Bank Levy Released

Here are the six ways you can get an IRS bank levy released within the 21-day hold period:

1. Pay off your balance.
2. Request a little more time to pay off your balance.  The IRS doesn’t always grant informal requests like this, but if you come up with some kind of game plan for how you are going to pay off your balance in the near future, the IRS may buy it and release the levy.
3. Set up an installment agreement — and make sure the terms of the agreement don’t permit a levy.
4. Prove that the levy is creating an economic hardship for you.  This doesn’t just mean that the levy is inconvenient — it means that the levy is preventing you from meeting your basic, non-luxury living expenses.  This is commonly done by getting into CNC status, but you can also take a more informal approach based on a conversation with the IRS employee who issued the levy.  If you are really about to lose your shirt due to the levy, and the IRS employee who issued the levy is being unreasonable, speak with that individual’s manager.  If the manager is being unreasonable, reach to the Taxpayer Advocate Service for help.
5. Submit an offer in compromise.  An offer in compromise is an agreement with the IRS to settle your tax debt for less than you owe.  Although 21 days is a very short time period to prepare and submit an offer in compromise, this could work if your offer actually has a good chance of being accepted based on the offer in compromise formula and is not a frivolous attempt to delay collections activities.
6. Prove that the levy was not administered according to proper procedures.  This can be tough since usually the IRS does follow proper procedures before levying a taxpayer’s bank account.

Realistically, with most of our clients, we either set up an installment agreement or plead hardship within the 21-day period to get the levy released.

Then, after that bleeding has stopped — or, rather, we prevented the bleeding with the metaphor here referring to the bank levy — we consider a longer-term solution to the client’s issue.

Maybe it’s looking at the liability the IRS claims that they owe and digging into whether they really owe that much money.

Or maybe it’s submitting an offer in compromise because like I said, that would be tough to do within a 21-day span.

Author:

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Logan Allec, CPA, Founder and Owner

Logan Allec has been serving taxpayers as a CPA for over 14 years. After leaving his role at a "Big 4" firm, he started Choice Tax Relief to help everyday Americans who have found themselves behind on their taxes. He also educates thousands of people daily about tax relief on his YouTube channel. In addition to his CPA license, Logan also has a Master's Degree in Taxation from the University of Southern California (USC). He lives with his wife and children in the Los Angeles area. Learn more about Logan here.

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