IRS Collection Notices: When Is Your Client Actually In Trouble?

When your client is blowing up your phone telling you that the IRS is about to take all of their money, well, they’re right, or at least it’s a real possibility.?

For most professionals—whether you're a CPA, a realtor, or an attorney—this type of situation may be outside of your comfort zone.?

But your client is looking to you for answers and they’re expecting you to give them the answer.

The IRS does have the power to seize assets—bank accounts, wages, homes, and more—if back taxes aren’t paid.?

Yet, for all its tough talk, the IRS has to follow strict rules before it can start talking stuff.

And that means your client still has a chance so long as they don’t bury their head in the sand.

The key is understanding the steps the IRS takes before they can legally start taking property and doing damage.

Let’s unpack what these notices really mean and, most importantly, what your clients can do before the IRS starts grabbing their assets.

So, what exactly are these IRS levy notices, and how can you make sure your client keeps their hard-earned money??

This article will tell you what you need to know about these notices and how to help your clients take action before it’s too late.

Let’s break it down.

What are the Notice of Levy Collection Notices?

A notice of levy is the IRS’s version of “We’re done asking nicely.”?

It’s not just a friendly reminder that your client owes back taxes.?

It’s the IRS putting them on notice that if they don’t do something ASAP, the government will start seizing their assets.

The good news is that the IRS can’t just waltz in and take your client’s stuff overnight.?

They’re required to send a Final Notice of Intent to Levy first, giving your client one last shot to get their act together.?

This notice is their Hail Mary—it gives them 30 days to fix things before the IRS starts collecting.

The Final Notice of Intent to Levy:?

This is the letter you need to pay attention to.

The Final Notice of Intent to Levy is exactly what it sounds like—the last warning from the IRS before they take action.?

Once your client gets this notice, they have 30 days to pay up, make arrangements…or request an appeals hearing.

Make sure you’re aware of the right to an appeal because it’s often overlooked and it must be filed within 30 days of the Final Notice.

Most clients are so panicked they miss this small, but crucial, detail.?

That hearing can delay the levy and buy your client enough time to sort things out.?

If they act fast, they can keep the IRS at bay while you work on a solution.?

The trick is making sure they don’t let the deadline pass.

The IRS Must Send Certain Notices First Before They Send the Final Notice of Intent to Levy

Here’s the silver lining—the IRS doesn’t just go from zero to asset seizure.?

They send multiple notices before they get to the big one.?

They come slow and steady and are increasingly threatening.

Initial Notices – The first wave of IRS letters starts by politely informing your client they owe taxes. They’ll get details about the amount due, penalties, and interest. These notices are a gentle nudge—“Hey, you should pay this.”

Intent to Levy Notices – Next comes the IRS turning up the heat with notices like CP504, which say, “We’re getting serious now. Pay up, or we’ll start seizing assets like tax refunds.” Still, not the final stage.

Final Notice of Intent to Levy (CP90, LT11, CP297) – This is it. The IRS is done playing nice. If your client ignores this final notice, the IRS is taking their money. They’ve got 30 days to request a hearing or pay the debt before the IRS starts taking things.

What Happens If They Ignore the Final Notice?

So, what happens if your client ignores this final notice??

That’s where the IRS starts taking their money.

Here’s what they’ll do…

Bank Accounts: The IRS will freeze your client’s account, and after 21 days, whatever’s in there gets seized and sent to the IRS.

Wages: Wage garnishments are a classic move. The IRS tells your client’s employer to start sending a chunk of their paycheck directly to them.?

Real Property: Homes, cars, and anything else of value are theoretically fair game although physical and real property seizure generally doesnt occur unless the taxes owed are substantial.

Retirement Funds: The IRS can levy any and all retirement accounts, including their 401(k), IRAs, and everything in between.

Social Security: Even Social Security isn’t off-limits but the IRS is limited to taking a portion.

Once that 30-day window is up, your client’s money will be taken to pay down their past debt.

TL;DR

Here’s the quick and dirty version of what you need to know about IRS levy notices:

The IRS can’t take assets without first sending a Final Notice of Intent to Levy.

Your client has 30 days to request a hearing or resolve the debt after receiving the final notice.

Key notices include CP504, CP90, LT11, and CP297, with each one ramping up the pressure.

If ignored, the IRS can seize bank accounts, wages, real property, retirement benefits, and even Social Security.

There’s hope, but your client has to act fast to stop the levy.

Let’s Talk:

Have you ever dealt with a client who was blindsided by an IRS levy notice??

How did you help them keep their assets safe??

Share your experiences and strategies in the comments—let’s get the conversation going about the best ways to protect clients from the IRS’s grasp.