When working with an IRS Revenue Officer, there are two warning signs that levy action is imminent.
The first sign is the IRS Final Notice of Intent to Levy. This notice is required by law (Internal Revenue Code 6331) and provides a 30 day right to stop levy action by filing an administrative appeal. The appeal puts resolution in the hands of an IRS settlement officer (as opposed to an IRS enforcement officer). This is known as a collection due process appeal because levy action cannot occur until you have exhausted your rights to review. And if you cannot reach resolution with a settlement officer, there are additional rights of appeal to U. S. Tax Court. While this process is pending, there is no levy action.
If you missed filing the appeal, there are virtually no restrictions on the IRS’s ability to levy your wages, bank accounts, etc. Which leads to the second sign that levy action could occur: IRS Letter 3174, New Warning of Enforcement.
The IRS does not have to issue Letter 3174 before levying – but by their own administrative rule (Internal Revenue Manual 220.127.116.11.2.7), the IRS does send a second warning in certain circumstances. The purpose of Letter 3174 is to provide a refresher to taxpayers if a long time has passed since the Final Notice of Intent to Levy was issued. As an alternative to sending the letter, a Revenue Officer can also give the notice intended by Letter 3174 verbally. This is an IRS administrative courtesy. The point here is to recognize the signs of when levy may be imminent.
It is important to recognize the circumstances that will lead to the IRS sending Letter 3174, New Warning of Enforcement. Of course, there has to first be the Final Notice of Intent to Levy. And you should not receive Letter 3174 from the IRS Automated Collection Service (ACS) – just IRS Revenue Officers. Automated Collection Service letters are all computer generated – no human function involved. Letter 3174, New Warning of Enforcement is generated by a Revenue Officer. So, expect to receive Letter 3174 only if you are working with a local IRS Revenue Officer, who will manually generate the warning letter. In most every other situation, it is unlikely you will get a refresher notice after a Final Notice of Intent to Levy has been issued.
There is also a time frame that Revenue Officers that follow in issuing the refresher levy warning notice. Revenue Officers are instructed to issue Letter 3174 if more than 180 days have passed since the Final Notice of Intent to Levy was issued, and no enforcement action or warning of enforcement has occurred in that time frame.
If you receive Letter 3174, it is important to call your Revenue Officer within 15 days of the date on the letter. That is the window the IRS provides before starting enforcement again. In most cases, all you need to do is make contact with the Revenue Officer, find out what it is she needs from you (i.e., a financial statement), and set a date to provide it. You should not need to resolve the case in 15 days, just make efforts to communicate with the Revenue Officer. Not responding to the notice will likely result in levy action against your wages and bank accounts.