How the IRS Finds Out About Your Assets

Facing IRS collection notices is scary — but knowing how the agency discovers your assets and what to do next puts you back in control. Below is an optimized, detailed version of your draft that aligns with Precision Tax’s services, explains how levies work, and gives clear, actionable next steps your readers can take (and call us to handle).

Ways the IRS Discovers Your Assets

The IRS has many legal tools and data sources to learn about your financial life. Common paths they use include:

• Third-party information returns: employers (W-2), banks and brokerages (1099s), payment processors, and clients file forms that report income and account activity directly to the IRS.
• Bank and brokerage records: when the IRS starts a collection case it can request bank transaction records or serve a levy directly to a financial institution.
• Property and public records: deeds, title records, and UCC filings (used for business assets) are public and searchable.
• Government cross-matches: IRS systems compare information received from state agencies, the SSA, Treasury, and other federal data sources.
• Audits, collections and examinations: collections agents and revenue officers can interview third parties and use legal process to obtain asset information.
• Third-party tips or lawsuits: court filings, legal settlements, or whistleblower submissions can reveal assets.

Understanding these channels explains why ignoring notices usually makes matters worse: the IRS often already knows more than you think.

The Most Common Levies — What They Target

When the IRS moves from notices to enforcement, the most common levy targets are:

• Wage levies (garnishments): your employer receives a levy and must withhold a portion of disposable earnings.
• Bank levies: the IRS can freeze and seize account balances at the bank that holds your funds.
• Levies on contract or accounts receivable: the IRS can collect directly from clients or payors (common for independent contractors).
• Levies on non-retirement accounts and personal property: vehicles, business assets, or cash on hand can be levied or seized.
• Levies on retirement distributions: the IRS can levy distributions from retirement accounts and pensions (but there are procedural protections and timing issues).

Important: levies are different from liens. A tax lien is a public claim against property; a levy is the legal seizure of property to satisfy tax debt.

Typical IRS Levy Timeline & Notices to Watch For

The IRS must notify you before levying. Key steps and notices include:

1. Notice of balance due & collection attempts — early notices requesting payment.
2. CP504 / Final Notice of Intent to Levy (Letter 1058 / LT11) — a formal warning that the IRS intends to levy you within 30 days.
3. Levy issued — if you fail to timely respond or reach an arrangement, the IRS can serve levies on employers or financial institutions.

Acting during the 30-day window after a Final Notice is critical — you usually have the right to request a Collection Due Process hearing or propose payment terms to avoid seizure.

Immediate Checklist: What To Do If You Get a Levy Notice

1. Don’t ignore it. Read the notice and note deadlines.
2. Verify the notice. Confirm it’s legitimate (scams exist). If you received a CP504 or LT11, that’s real IRS correspondence.
3. Get your account transcript. This shows charges, penalties, and payments applied.
4. Contact a tax pro immediately. A licensed EA, CPA or tax attorney can stop missteps and often prevent levies.
5. Request a Collection Due Process (CDP) hearing or appeal within the deadline if appropriate.
6. Consider temporary solutions: request a short installment agreement, ask for Currently Not Collectible (CNC) status, or apply for penalty abatement.
7. Do not send money to third parties that request non-IRS payment methods (gift cards, Zelle, crypto). Always route payments through IRS Direct Pay, EFTPS, or a verified IRS lockbox.

How Precision Tax Helps

Precision Tax’s levy practice focuses on stopping collection actions and securing the best long-term outcome. Typical services we provide:

• Immediate levy release requests: urgent requests for levy release due to financial hardship or incorrect assessment.
• Installment agreement and partial-payment plans: set up affordable monthly payments to stop enforcement.
• Offer in Compromise (OIC) representation: prepare and negotiate OICs when appropriate.
• Currently Not Collectible (CNC) status applications: get temporary relief for clients who can’t pay.
• Lien resolution & lien withdrawal: negotiate lien withdrawals and ensure liens don’t block refinancing or asset sales.
• Bank levy reversal & transcript review: confirm amounts, correct errors, and demand bank levy releases.
• Bookkeeping cleanup & return filing: we reconstruct records, file missing returns and prepare the accurate documentation the IRS requires to evaluate relief options.
• Payroll/Trust Fund resolution: specialized help for payroll tax levies and trust fund issues for business owners.

We take over communications so clients can stop answering calls and focus on running their lives and businesses.

Preventing Levies: bookkeeping & tax compliance best practices

Many levy problems start with poor records or unfiled returns. Preventive steps we recommend:

• Keep bank statements and receipts organized monthly.
• Reconcile accounts and payroll records — clean books make relief options easier to qualify for.
• File all required returns on time (or immediately for missing years).
• Automate estimated tax payments or payroll tax deposits.
• Use professional bookkeeping if volume or complexity is high.

Precision Tax offers bookkeeping cleanups specifically to support levy defense and IRS negotiations.

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