Levies and liens are often confused. While a lien is merely a security for tax debt, a levy, on the other hand, is the process by which the asset is seized and sold to reconcile tax debt.

An IRS tax levy can be assessed after:

(1) The IRS sends a Notice and Demand for Payment;
(2) The taxpayer fails to pay off the tax debt;
(3) The IRS sends the Final Notice of Intent (left at the home, work, last known address, or served in person); and
(4) The IRS sends Notice of Your Right to a Hearing.

In the event that the IRS intends to levy an asset of the taxpayer’s, the taxpayer may request an IRS manager to review his/her case or a hearing, by filing for Collection Due Process with the Office of Appeals. Any filing must transpire sooner than 30 days after the Notice.

After an IRS tax levy has begun, it will discontinue only after one of the following:
(1) The tax liability is fully paid;
(2) the taxpayer pursues tax resolution with the IRS, resulting in the release of the levy;
(3) The Statute of Limitations associated with the tax debt expires (usually 10 years after the last liability was accrued).

In the event an IRS tax levy is placed on the taxpayers bank account, the bank is legally obligated to put on hold all current deposits, up to the amount of the tax liability. This is to allow attempts at resolution to take place, either through appeal or an IRS program for tax resolution. At this time, the owner of the account may claim that some of the money withheld must be used for living expenses, such as housing, transportation, etc., in which case the IRS may release some of the money. 21 days later, if the tax liability has not been addressed, the bank sends the withheld money to the IRS.