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Differences Between IRS Levies and NY State Levies

Differences Between IRS Levies and NY State Levies

February 8, 2026 | Uncategorized

IRS Levies vs. New York State Levies: Key Differences

Getting behind on your taxes could result in serious repercussions, such as tax liens and levies. A tax levy is when a tax agency seizes your assets for unpaid taxes. You can potentially face a tax levy from the Internal Revenue Service or the New York State Department of Taxation and Finance. Although both state and federal levies take your assets, the IRS and NY use slightly different processes. Read on to learn about IRS levies versus New York levies, including key differences and the best ways to respond. Also, consider talking to a tax professional, such as a licensed attorney and CPA from the Timothy S. Hart Law Group. You can schedule a consultation online or by calling 518-213-3445 or 917-382-5142.

Key Takeaways

  • Overall levy differences – The biggest difference between IRS and DTF levies as a whole is that only the DTF must file a tax lien (tax warrant) before levying property.
  • Bank levy differences – IRS bank levies have a 21-day waiting period between the bank receiving the levy notice and sending funds to the IRS.
  • Employers not notified of a NY wage levy – The DTF gives state taxpayers the chance to garnish their own wages instead of having their employers do it.
  • Different wage garnishment limits – NY is limited to 10% of gross wages or 25% of disposable earnings, while the IRS has no limit as long as the IRS leaves the exempt amount.

An Overview of Tax Levies

A tax levy is where a tax collection authority, such as the Internal Revenue Service (IRS) or New York State (NYS) Department of Taxation and Finance (DTF), seizes a taxpayer’s property because that taxpayer has unpaid taxes. This seizure doesn’t occur the moment a taxpayer has an outstanding tax balance. Rather, a levy occurs late in the tax collection process after the multiple letters and notices concerning the tax debt are ignored.

Tax Levies Vs. Liens

A tax levy isn’t the same thing as a tax lien. A lien is “only” a legal claim to property. This legal claim exists to protect the tax agency’s ability to collect a tax debt. A tax levy is the actual taking of property, including:

The IRS Tax Levy Process

The majority of IRS tax levies begin with a series of notices and letters, most commonly:
  • CP14: An initial notice from the IRS asking you to either pay your unpaid tax bill or contact the IRS to make other payment arrangements.
  • CP501: A reminder notice about your unpaid taxes.
  • CP503: Another reminder notice about your unpaid taxes.
  • CP504: This is a final notice from the IRS before it begins more extreme tax collection actions, such as levying your property.
Assuming you don’t respond to these notices, the IRS sends a Notice of Intent to Levy. This often comes as LT11 or LT1058 and provides 30 days to resolve your tax debt with the IRS. If you still ignore the IRS, what happens next depends on the property being levied.

Bank Levy

The IRS sends IRS Form 668-A to your bank. The bank is required to freeze the funds for the amount listed on the levy for 21 days. After the 21-day waiting period has passed, the bank releases the frozen funds to the IRS. The IRS may not levy bank funds that are deposited into the account after the bank receives the levy or are exempt. Exempt funds include money received from specified sources, such as:
  • Unemployment benefits
  • Certain pension payments
  • Workers’ compensation benefits
  • Child support payments
  • Certain welfare and public assistance payments

Wage Levy

The IRS sends Form 668-W(ICS) or 668-W(ACS) to your employer, along with a Statement of Dependents and Filing Status. Your employer gives you this latter document to provide the information necessary to calculate how much of your paycheck is exempt from wage garnishment. This exempt amount is based on your filing status and the number of dependents you claim. You can read IRS Publication 1494 for more information on how this amount gets calculated.

Property Levy

The IRS schedules a public or sealed bid auction, but before the sale, the IRS notifies you of the minimum bid price and gives you a chance to challenge this valuation. When the IRS schedules the auction, the IRS provides notice with IRS Form 2434, Notice of Public Auction Sale, or Form 2434-A, Notice of Sealed Bid Sale. There should be at least 10 days from the date of the public notice to the date of the auction sale.

The NYS Tax Levy Process

Whether the NYS Department of Taxation and Finance is levying your wages, bank account, or other physical property, the first steps are generally the same. These include:
  • Step 1: The Tax Department of the DTF sends a tax bill.
  • Step 2: The DTF waits for you to respond to the tax bill by making arrangements to pay it or challenging the bill.
  • Step 3: Assuming you don’t challenge the bill or make arrangements to pay it, the DTF files a tax warrant.
A tax warrant is similar to a tax lien in that it establishes a legal claim for New York on your property. Before the DTF can issue a levy, it has to file a tax warrant first. After filing the tax warrant, the DTF sends you Form DTF-978, Notice to Judgment Debtor or Obligor. What occurs next depends on the type of levy.

Bank Levy

The DTF serves the bank with the levy, with the bank having 90 days to comply. The bank must respond to the levy in one of four ways:
  • Sending the DTF money up to an amount that’s equal to the amount requested.
  • Notifying the DTF that there’s no money to send.
  • Notifying the DTF that the only money in the account is exempt from the levy.
  • Stating that the bank won’t comply with the levy unless a court order (turnover order) is obtained.

Income Execution

A New York income execution is the same thing as a wage garnishment, and it begins with the DTF sending it to you, not your employer. Upon receipt of the notice, you can:
  • Agree to voluntarily send the DTF 10% of your gross income or 25% of your disposable income from each paycheck and do so within 20 days of receiving the income execution (there’s a special calculator for figuring out how much to send the DTF); or
  • Ignore it.
If you ignore it, the DTF sends the income execution to your employer. Your employer then sends money (up to 10% of your gross wages from each paycheck) to the DTF unless an exception applies as set out in Article 52 of the New York Civil Practice Law and Rules. This wage garnishment stays in effect until your entire tax bill is paid.

Property Levy

After seizing your property, the DTF schedules an auction and notifies you of its date, time, and location. You can request that the DTF sell your seized property within 60 days.

Key Differences Between IRS and New York Tax Levies

Bank Levies
Requirement New York IRS
Notice(s) Required? Yes, DTF-978, Notice to Judgment Debtor or Obligor Yes, Form 668-A
Prior Lien Filing Required? Yes, a tax warrant No
Limit to Levy Amount? No, the DTF can take up to the full amount listed on the levy (not including exempt funds) No, the IRS can take up to the full amount listed on the levy (not including exempt funds)
Wage Levies
Requirement New York IRS
Notice(s) Required? Yes, DTF-978, Notice to Judgment Debtor or Obligor Yes, Form 668-W (ACS) or 668-W (ICS)
Prior Lien Filing Required? Yes, a tax warrant No
Amount Subject to Levy? 10% of gross wages or 25% of disposable earnings Any amount not otherwise exempt
Prevent the Employer From Learning About the Tax Debt? Yes, a taxpayer can garnish their own wages to prevent their employer from doing so. No
Property Levies
Requirement New York IRS
Notice(s) Required? Yes, DTF-978, Notice to Judgment Debtor or Obligor and a notice of the auction date, location, and time. Yes, Form 2434, Notice of Public Auction Sale or Form 2434-A, Notice of Sealed Bid Sale
Prior Lien Filing Required? Yes, a tax warrant No
Excess Sales Proceeds Available to the Taxpayer? Yes Yes

What To Do If You’re Being Levied by the IRS

The easiest way to handle a federal levy is to contact the IRS during the tax collection process and make arrangements to resolve the tax debt. Common options are: If you need to stop a levy that’s in progress, you can ask for a release by:
  • Paying the full tax balance.
  • Showing that the statute of limitations to collect the debt has run.
  • Showing the IRS that releasing the levy will help you pay your tax debt.
  • Setting up an installment agreement with terms requiring a levy release.
  • Showing the levy creates undue economic hardship.
  • Showing that releasing the levy won’t hinder the IRS’s ability to collect your tax debt, and the value of the property being levied exceeds your tax debt.

What To Do If You’re Being Levied by the Department of Taxation and Finance

The best way to deal with a New York tax levy is to prevent it from occurring by: If you decide to challenge the tax debt, you’ll usually have two options to choose from. First, there’s submitting a protest with the Bureau of Conciliation and Mediation Services by filing Form CMS-1-MN, Request for Conciliation Conference. Second, there’s requesting a tax appeals hearing with the Division of Tax Appeals by filing Form TA-100, Petition. If neither option is available, you can request a review by contacting the DTF directly. If the levy process has already begun, you can request a levy release by:
  • Making payment arrangements with the DTF.
  • Showing that the levy creates an undue economic hardship.
  • Showing that the DTF made a mistake during the tax collection process.
  • Showing that releasing the levy is in the state’s best interests.

Get Help Fighting an IRS or New York DTF Levy

Because tax levies can be devastating and time is of the essence, it’s strongly recommended that you contact a tax professional when dealing with a levy. They have the local knowledge and experience to deal with levies from the IRS or New York DTF. They also know how to prevent a tax problem from spreading from one tax agency to another. The key is to act quickly, as your time to act could be a matter of days. To get started, contact the Timothy S. Hart Law Group, either online or by calling 518-213-3445 or 917-382-5142.

IRS and NYS Tax Levy FAQs

How do I know if the IRS or NY DTF issued the levy?

Before the levy hits, you should have received multiple notices and letters. These documents should clearly identify who’s issuing the levy.

Can the IRS and NYS DTF levy me at the same time?

Yes, it’s possible to be levied by both tax agencies simultaneously. That’s why it’s critical to work with a tax professional who has experience in your state – they’ll know how to navigate multiple federal and state levies strategically.

How much can a bank levy take from my bank account?

The IRS and NYS DTF can take up to the amount you owe, but they can only levy the funds in your account the day the levy is served. To seize additional funds, they generally need to issue another levy. Don’t let the state take your assets – contact us about DTF representation. 

Sources: – https://www.tax.ny.gov/pdf/publications/general/pub131.pdf – https://www.tax.ny.gov/enforcement/collections/income-executions.htm – https://www.irs.gov/businesses/small-businesses-self-employed/information-about-wage-levies – https://www.tax.ny.gov/enforcement/collections/tax-warrants.htm – https://www.irs.gov/businesses/small-businesses-self-employed/information-about-bank-levies – https://www.tax.ny.gov/enforcement/collections/levies.htm – https://www.irs.gov/businesses/small-businesses-self-employed/what-happens-after-my-property-is-seized-and-how-do-i-get-it-back – https://www.irs.gov/businesses/small-businesses-self-employed/what-if-i-get-a-levy-against-one-of-my-employees-vendors-customers-or-other-third-parties – https://www.treasurydirect.gov/government/security-liquidation-proceeds/internal-revenue-service-levy/ – https://www.irs.gov/irm/part5/irm_05-010-005 – https://www.irs.gov/irm/part5/irm_05-011-004 – https://www.tax.ny.gov/protest/ – https://www.irs.gov/businesses/small-businesses-self-employed/how-do-i-get-a-levy-released

Attorney Timothy Hart

Timothy S Hart, the founding partner of the tax law firm of Timothy S. Hart Law Group, P.C. is both a New York Tax Lawyer & Certified Public Accountant. His area of expertise includes innovative solutions to solve your Internal Revenue Service and New York State tax problems, including tax settlements through the Federal and New York State offer in compromise programs, filing unfiled tax returns, voluntary disclosures, tax audits, and criminal investigations. [ Attorney Bio ]

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