Julian Drago
October 8, 2025
When you operate a business in the United States or generate income subject to federal taxation, it is essential to understand what happens if the IRS determines that you have an outstanding tax debt. One of the strongest enforcement tools the tax authority can use is a levy, which consists of the legal seizure of your property or funds to satisfy what you owe.
Although this situation often generates concern, knowing how the process works, what you can do to avoid it, and what rights you have allows you to handle any IRS notice with greater confidence.
A levy is not the same as a lien. While a lien is a legal claim on your property, a levy involves the actual taking of your assets or income. When the IRS reaches this point, it means that previous notices, payment opportunities, and communication steps did not lead to a resolution. Understanding this dynamic is key to acting quickly and avoiding more serious consequences for your personal finances or your business.
An IRS levy is the action through which the tax authority seizes your property or funds in order to recover unpaid tax debt. This measure can be applied to different types of assets, including:
Before the IRS can perform a levy, it must send you several notices, including one very specific one: the Final Notice of Intent to Levy and Notice of Your Right to a Hearing. Receiving this notice means you are at the final stage before the IRS takes direct action on your assets.
If you receive this notice, the most important thing is to contact the IRS immediately and seek a formal solution, such as a payment plan, a temporary agreement, or a review of your case. Ignoring it only accelerates the levy process.
The IRS follows a structured process before seizing any property. In general, the steps are:
This process applies to individuals as well as businesses, including LLCs, corporations, and even companies managed from abroad that operate in the United States.
The IRS can order your employer to withhold a portion of your wages. Unlike other forms of garnishment, IRS wage levies do not follow a fixed limit; they are calculated using internal IRS tables that leave only the amount considered essential for your subsistence.
The IRS can order your bank to freeze the funds in your account. After 21 days, if you take no action, the money is sent to the IRS.
This waiting period exists so you can seek help, argue an error, or set up a payment arrangement.
If the debt is high and the taxpayer does not cooperate, the IRS can levy and sell vehicles, property, or business assets.
The IRS can require clients, suppliers, or financial institutions to send pending payments directly to the tax authority.
Avoiding a levy is possible even if you have already received notices. The key is to act fast:
Once a levy has been executed, its release depends on several factors. The IRS may lift it if you:
In bank levies, acting within the 21-day period can still help you avoid losing the frozen funds.
These two terms are often confused but represent different actions:
A lien can exist without a levy, but a levy almost always implies there was already a lien.
Wage levies can arise for different reasons (child support, student loans, consumer debt). A court orders the employer to withhold a percentage of wages.
The IRS wage levy works similarly but has specific characteristics:
If you have a business in the U.S. or employ staff, it is important to understand these rules to properly handle any levy order.
If you operate an LLC, a corporation, or any business in the U.S., a levy can disrupt operations, especially if it affects accounts or income.
You should:
Many foreign entrepreneurs face problems because they do not fully understand IRS procedures. Having clarity on these obligations is fundamental to operating safely in the U.S.
1. How long does it take for a levy to be executed after the final notice?
The IRS must wait at least 30 days after issuing the Final Notice of Intent to Levy. During this period, you may request a hearing or negotiate a resolution.
2. Can I stop a levy if I have no money?
Yes. If you can demonstrate immediate financial hardship, the IRS may temporarily suspend the levy while you arrange a payment plan or another resolution.
3. What if the IRS freezes my bank account by mistake?
You can request that the levy be released by providing evidence that it was issued in error. Banks generally hold the funds for 21 days before sending them to the IRS, giving you time to resolve the issue.
4. Does a levy affect my business if I operate from abroad?
Yes. If your business is registered in the United States or earns income subject to federal taxes, the IRS may take collection actions even if you operate the business from another country.
5. Does ignoring IRS notices make the levy go away?
No. Ignoring IRS notices will only make the situation worse and may speed up the collection process.
6. What assets can the IRS levy?
The IRS may levy bank accounts, wages, tax refunds, and, in some cases, other assets such as property or business income, depending on the circumstances.
7. How can I avoid an IRS levy?
The best way to avoid a levy is to respond promptly to IRS notices, file your tax returns on time, and work with the IRS to arrange a payment plan or another available resolution if you cannot pay your balance in full.
Complying with your tax obligations in the United States is essential to protect your assets, your business, and your peace of mind.
If you want to operate legally, avoid levies, or correctly structure your business to prevent risks, at Openbiz we support you through the entire process — from creating your company to managing all the administrative and tax requirements needed to stay compliant.
If you want to operate safely, grow without obstacles, and avoid problems with the IRS, contact us at Openbiz. We’re ready to help you do it right from day one.
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