How Many Notices Does the IRS Send Before Levy?
As the nation’s most powerful collection agency, the IRS can levy — that is, seize — your assets and income streams almost at will.
Unlike most other parties looking to collect a debt, the IRS doesn’t have to get a court order to, say, garnish your wages or take money out of your bank account.
However, the IRS does have some hoops it has to jump through before it can start seizing your assets, and one of those hoops is that it must send taxpayers a series of proper notices.
In total, the IRS typically sends five notices before it levies an individual, though only three of these notices are required.
These notices are typically sent about 10 weeks apart.
The table below summarizes these notices, and below the table I describe each of these notices in more detail.
| Notice | Notice Name | Statutory Requirement | IRS Levy Authority After Sending |
|---|---|---|---|
| CP14 | Notice and Demand | IRC § 6303 | None |
| CP501 | 1st Notice of a Balance Due | Not Required | None |
| CP503 | 2nd Notice of a Balance Due | Not Required | None |
| CP504 | Notice of Intent to Levy | IRC § 6331(d) | Authority to Levy State Tax Refund |
| LT11 | Final Notice of Intent to Levy and Notice of Right to a CDP Hearing | IRC § 6330(a) | Authority to Levy All Non-Exempt Assets and Income |
Table of Contents
1. Notice CP14 (Required)
IRS Notice CP14 is the first notice the IRS sends after you file a tax return with a balance due.
This notice simply informs you of your balance due for the year — including not only your tax liability per your tax return but also the IRS’s calculation of your penalties and interest — and demands that you pay this amount by a date in the future.
Sending this notice satisfies the requirements of Internal Revenue Code Section 6303, which requires the IRS to send a taxpayer a “notice and demand for tax” within 60 days of assessing a tax liability against a taxpayer.
To learn more about IRS Notice CP14, read this article or watch the video below.
2. Notice CP501 (Optional)
IRS Notice CP501 is the 1st Notice of a Balance Due.
The IRS is not required to send this notice before levying you, but it often sends it out 10 weeks after the Notice CP14 in an effort to get you to pay what you owe without the IRS having to take forced collection activity against you.
The IRS does not always send this notice out to taxpayers with a balance due; sometimes it sends Notice CP502 or even Notice CP504 right after sending the Notice CP14.
The language used in the CP501 is a bit stronger than that used in the CP14; the CP501, for example, says the taxpayer must pay the balance due by a certain date in the future as opposed to the CP14, which simply gives the amount due and the due date.
To learn more about IRS Notice CP501, read this article or watch the video below.
3. Notice CP503 (Optional)
IRS Notice CP503 is the 2nd Notice of a Balance Due. The IRS is not required to send this notice before levying you.
Similar to the Notice CP501, the Notice CP503 is not a required notice.
The IRS does not always send this notice out to taxpayers with a balance due; sometimes it sends Notice CP504 right after sending the Notice CP14 or Notice CP501.
Unlike the previous notices, the CP503 includes this bit after the demand to pay: “If you don’t act now, the IRS may consider levying (seizing) your income or bank account.”
To learn more about IRS Notice CP503, read this article or watch the video below.
4. Notice CP504 (Required)
IRS Notice CP504 is the Notice of Intent to Levy.
This is a threatening notice that informs the recipient as follows:
“You must pay your balance immediately or we may levy (seize) your property. If you don’t make your payment now, we’ll consider your noncompliance an active choice and you could face a levy.”
Sending this notice satisfies the requirements of Internal Revenue Code Section 6331(d), which requires the IRS to notify a taxpayer — via certified mail — of its intent to levy them no less than 30 days before the levy action takes place.
To learn more about IRS Notice CP504, read this article or watch the video below.
5. Notice LT11 (Required)
IRS Notice LT11 is the final notice that the IRS sends to a taxpayer via certified mail before it intends to levy their assets. This notice also informs the taxpayer of their right to a Collection Due Process (CDP) Hearing with an IRS Appeals Officer.
Sending this notice satisfies the requirements of Internal Revenue Code Section 6330(a), which requires the IRS to notify a taxpayer — via certified mail — of their right to a hearing to challenge the appropriateness of the IRS’s proposed levy action as well as propose collection alternatives to the IRS’s proposed levy action.
It is generally in your best interest to request a CDP Hearing to avoid the IRS taking levy action against you.
To learn more about IRS Notice LT11, read this article or watch the video below.
What to Do If You Have Received a Levy Notice From the IRS
If you have received a levy notice from the IRS, it’s important that you take action immediately to avoid the disruption to your financial life that a levy will almost inevitably cause.
1. Check the notices for mistakes.
Believe it or not, the IRS often makes mistakes in calculating a taxpayer’s balance due, including penalty and interest amounts.
Be sure that you or a qualified tax professional verifies the information the IRS has given you on the notices and raise any issues you find directly with the IRS.
2. Consider submitting a penalty abatement request.
While not guaranteed, the IRS will sometimes partially or fully abate the penalties that it has charged to a taxpayer’s account.
Read this article to learn more about IRS penalty abatement.
3. Determine if you can fully pay what you owe.
Once you’ve checked the information the IRS provided to you on the notice or notices it sent, as well as pursued any penalty abatement you may be eligible for, now you must figure out what to do with the remaining amount you owe the IRS.
Can you pay it in full? If so, it may be the right move, given that even if you enter into an installment agreement with the IRS, penalties and interest will still continue to accrue.
4. Consider your resolution options.
If you cannot or are unwilling to pay your balance in full, there may be relief programs available to you to take advantage of.
Now, if you can clearly pay your tax debt in full, the only relief program that is likely available to you is a full-pay installment agreement — this is essentially an agreement with the IRS to fully pay what you owe over a period of time.
If paying what you will truly cause you financial hardship, then it’s possible you may qualify for one of the major tax relief programs that the IRS offers taxpayers:
- Offer in Compromise: This is an agreement with the IRS to settle your tax debt for less than you owe.
- Partial-Payment Installment Agreement: This is an agreement with the IRS to pay off less than you owe in regular monthly installment payments.
- Currently Not Collectible (Hardship) Status: This is a temporary status that you can have the IRS place you in that will result in you not having to make any payments to the IRS until the IRS decides to revisit your case.
For more information about these tax relief options, check out our “What Is Tax Relief and How Does It Work?” article or watch the video below!
Author:
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.
