Legal Definitions - intent to levy

An Intent to Levy is a formal notice issued by the Internal Revenue Service (IRS), which is the U.S. government agency responsible for tax collection and tax law enforcement. This notice is sent to an individual or entity that has a significant outstanding tax debt.

It serves as a final warning, informing the taxpayer that the IRS plans to seize their assets to satisfy the unpaid taxes. Upon receiving an Intent to Levy, the taxpayer typically has a 30-day period to respond. During this time, they can:

• Pay the full amount of taxes owed.
• Appeal the proposed levy.
• Negotiate a payment plan or other resolution with the IRS.

If no satisfactory action is taken within the specified timeframe, the IRS may proceed to take possession of various assets, such as bank accounts, wages, investment accounts, vehicles, or real estate, to cover the tax debt.

Here are some examples illustrating an Intent to Levy:

• Example 1: Small Business Bank Account
  Scenario: Maria owns a small catering business and, due to unexpected financial difficulties, falls significantly behind on her quarterly payroll taxes for her employees. Despite receiving several reminder letters and notices from the IRS, she hasn't been able to pay the overdue amount. Eventually, she receives an official "Intent to Levy" notice, specifically stating that the IRS plans to seize funds from her business checking account if the taxes are not paid or an agreement is not reached within 30 days.
  Explanation: This example demonstrates an Intent to Levy because the IRS is formally notifying Maria, a taxpayer with a substantial tax debt, of its plan to seize a specific asset (her business bank account) to recover the unpaid payroll taxes. The notice provides the mandatory 30-day window for her to resolve the issue before the levy is executed.

• Example 2: Individual Investment Portfolio
  Scenario: David, a high-income earner, consistently underreported his capital gains from stock market investments for several years, resulting in a large unpaid income tax liability. After an audit and subsequent demands for payment went unaddressed, David receives an "Intent to Levy" notice. The notice specifies that the IRS intends to place a levy on his brokerage account, liquidating a portion of his investment portfolio to cover the outstanding tax debt if he fails to respond or pay within the given timeframe.
  Explanation: Here, the Intent to Levy is directed at an individual's financial investments. The IRS is issuing a clear warning that it will seize assets (shares and funds within the brokerage account) to satisfy a significant personal income tax debt, providing David the legally required opportunity to act before the levy is enforced.

• Example 3: Real Estate Lien
  Scenario: The Johnson family inherited a vacation property but failed to pay the associated estate taxes and subsequent property taxes for several years. After numerous attempts by the IRS to collect the overdue amounts, they receive an "Intent to Levy" notice. This notice warns that if the tax debt is not settled within 30 days, the IRS will place a lien on the inherited vacation property, which could eventually lead to its seizure and sale to recover the unpaid taxes.
  Explanation: This scenario illustrates an Intent to Levy targeting real estate. The IRS is formally notifying the Johnsons of its intention to take action against their property to collect the outstanding tax debt, offering them the statutory 30-day period to pay, appeal, or negotiate before a lien is placed and potential seizure proceedings begin.