Short answer
The IRS can levy money your clients or customers owe you by sending them a notice of levy, usually Form 668-A for business receivables. The client must send the IRS what it owes you at that moment. Commissions and similar pay can be levied continuously. A payment plan, a timely hearing request or a release request can stop it.
Key takeaways
- For contractors and businesses, the IRS levies receivables by serving a Form 668-A on the client or customer; the client must turn over what it owes you when the levy arrives.
- Most receivables levies are one-time: they reach amounts owed when served, plus future payments you already have a fixed right to. Fees and commissions treated as wages are levied continuously on Form 668-W.
- A client that ignores a levy can become personally liable for the amount, plus a 50 percent penalty if it has no reasonable cause (IRC 6332(d)); a client that pays is released from its obligation to you.
- Federal contractors face the Federal Payment Levy Program, which can take up to 100 percent of vendor payments, and may not get a hearing before the levy.
- The IRS may not levy while a payment plan request is pending or a plan is in effect (IRC 6331(k)); entering a plan is also a ground for releasing a levy.
How the IRS levies money your clients owe you
If you are self-employed, a contractor paid on Form 1099, or a business with customers who pay on invoice, the money those payers owe you is “property” the IRS can levy (IRC 6331(a)). The IRS does not need a court order. After the required notices, it serves a notice of levy directly on the payer, and the payer sends the money to the IRS instead of to you.
The IRS says it generally uses Form 668-A to levy property held by a third party, “for example, … bank accounts and business receivables.” Wages, salary, fees, bonuses and commissions go on Form 668-W, which works differently. Which form arrives, and what it reaches, depends on the kind of payment:
| Payment owed to you | Usual levy form | One-time or continuous? | What it reaches |
|---|---|---|---|
| Open invoices or amounts a client already owes | Form 668-A | One-time | What the client owes you when the levy is served. IRC 6331(b) says a levy reaches only obligations that exist at that time. |
| Future payments you already have a fixed right to (for example, royalties on work already published, or rent under a signed lease) | Form 668-A | Reaches future payments under that right | The IRS manual says a levy reaches a “fixed and determinable” right; if the right does not depend on future services, the levy also reaches the future payments. |
| Fees, commissions and similar pay for your services | Form 668-W | Continuous | Each payment until the levy is released (IRC 6331(e)). The IRS manual counts fees and commissions as “salary or wages” and tells officers to use Form 668-W on real estate brokerages to reach agents’ commissions. |
| Your business bank account | Form 668-A | One-time | Funds in the account when the levy arrives; the bank holds them 21 days before sending them. Deposits made later generally are not affected. |
| Payments from the federal government (contracts, vendor payments) | Federal Payment Levy Program | Continuous | Up to 100 percent of payments to federal vendors for goods or services (IRC 6331(h); Publication 594). |
The practical difference: a one-time levy on a client’s open invoices takes what is owed that day, and the IRS needs a new levy for work you bill later. A continuous levy keeps taking from every payment until it is released. Either way, the IRS can serve more levies on other clients, and the 21-day bank levy guide covers the account side. For how a levy differs from a court garnishment, see wage garnishment vs tax levy.
The notices that come first
A receivables levy is not the first thing that happens. Publication 594 says the IRS usually levies only after it has assessed the tax and sent a bill, you neglected or refused to pay, and it sent a Final Notice of Intent to Levy and Notice of Your Right to a Hearing at least 30 days before the levy. In practice that means:
- a CP504 (individuals) or CP504B (businesses) notice of intent to levy; then
- an LT11 or Letter 1058, which starts a 30 days (IRS.gov, 2026) window to request a Collection Due Process (CDP) hearing. A timely request generally stops the proposed levy while Appeals decides.
If a revenue officer is assigned, expect a request for a financial statement covering your income, assets and who owes you money. Our guide to working with a revenue officer explains what to expect.
What your client has to do with the levy
A client who receives a levy has little choice. The IRS tells third parties that “you must turn over to the IRS any property you have that belongs to the person levied against,” and to follow the instructions on the levy form closely.
- Ignoring it is expensive for the client. Under IRC 6332(d), a person who refuses to surrender levied property becomes personally liable for the amount (up to the tax the levy was meant to collect), plus costs and interest, and a penalty of 50 percent of that amount if it refused without reasonable cause.
- Paying the IRS clears the client. IRC 6332(e) says a person who honors a levy is discharged from its obligation to you for that amount. You cannot sue the client for the invoice it paid to the IRS.
- The client cannot negotiate your case. The levy shows a total due as of a stated date, and the IRS says it gives an updated payoff only to the person who owes the tax. Release has to come from the IRS, as a Form 668-D, Release of Levy/Release of Property from Levy.
For you, the business damage often exceeds the dollars: a client learns you owe the IRS, payments stop arriving on schedule, and if the levy is continuous every payment shrinks until it is released. It helps to tell an affected client that you are working on a release and to forward the IRS release form as soon as you have it.
How to get a receivables or 1099 levy released
IRC 6343(a)(1) says the IRS must release a levy when:
- the balance is paid, or the collection period ran out;
- releasing it will help collect the tax;
- you enter into an installment agreement, unless the agreement says the levy continues;
- the levy is creating an economic hardship; or
- the property is worth more than you owe and releasing part of it won’t hinder collection.
Publication 594 adds that the IRS will release a levy issued improperly, for example before the required notice, while a payment plan request or offer in compromise was being considered, or during a bankruptcy automatic stay.
Economic hardship: who can use it
The hardship ground is written for individuals. The Treasury regulation defines it as a levy that will leave “an individual taxpayer” unable to pay reasonable basic living expenses, and the IRS manual applies it the same way. If you are a sole proprietor or an independent contractor, the levy is on you as an individual, so you can ask for a hardship release and support it with a financial statement. A corporation or an LLC with its own tax balance generally cannot rely on this ground, because the rule is framed around an individual’s living expenses; it has to use the other grounds, usually a payment plan.
Essential business property
If the IRS levies tangible property essential to running your business, such as equipment, IRC 6343(a)(2) requires it to expedite its decision on a release when the levy would stop you from carrying on the business. That rule covers tangible property, not invoices or receivables.
How to ask: call the number on the levy notice, or the revenue officer if one is assigned, as soon as a client tells you about the levy. Name the release ground, and have proof ready: a payment plan confirmation, or a current financial statement. If the IRS does not act and the levy is causing significant hardship, the free Taxpayer Advocate Service (877-777-4778 (IRS.gov, 2026)) can step in through Form 911 (Rev. 6-2026 (IRS.gov, 6-2026)). Money already paid over is a separate issue; see getting levied money back.
A payment plan is usually the fastest way to stop it
The IRS may not levy while a payment plan request is pending, while a plan is in effect, or for 30 days after a request is rejected or a plan ends (IRC 6331(k)), and entering a plan is a release ground for an existing levy. Which plan fits depends on whose balance it is:
| Whose balance | Simple Payment Plan limit | What the IRS usually needs |
|---|---|---|
| Sole proprietor or 1099 contractor (individual income and self-employment tax) | $50,000 (IRS.gov, July 2026) | Usually no financial statement; apply online or by phone |
| Business without trust fund taxes | $50,000 (IRS.gov, July 2026) | All required returns filed; conditions on the Simple Payment Plan page |
| Business with trust fund (payroll) taxes | $25,000 (IRS.gov, July 2026) | All required returns filed; see also the trust fund recovery penalty guide |
| Above those limits | Not a Simple Payment Plan | Financial statement such as Form 433-A (individuals) or Form 433-B (Rev. 6-2026 (IRS.gov, 6-2026)) for businesses |
The Fresh Start hub explains the Simple Payment Plan (formerly the streamlined installment agreement) and the payroll tax rules for small businesses. Self-employed people with irregular income can find the platform-specific details in our guides for gig workers and small business owners.
Example (assumed figures)
Maya is a freelance designer paid on Form 1099. She owes $18,000 in income and self-employment tax and missed the 30-day window on her LT11. The IRS serves a Form 668-A on her largest client, which owes her $6,500 on two open invoices. The client sends the $6,500 to the IRS; her balance drops to $11,500 plus accruing interest. Work she bills the client the following month is not reached by that levy, but the IRS can serve another. Maya applies for a Simple Payment Plan online (her balance is under the individual limit), then calls the number on the levy with her plan confirmation to ask for release of any levy still in place and to head off new ones.
What to do this week if a client tells you about a levy
- Get a copy of the levy. Ask the client for the form number (668-A or 668-W), the date, the tax periods and the amount. Confirm it is real by calling the IRS at the number on IRS.gov, not one supplied by a caller.
- Check your account. Your IRS Online Account or transcripts show the balance by year and whether you received an LT11 or Letter 1058. If you never got a final notice, ask about your hearing rights.
- Decide how you will resolve the balance. Full pay, a Simple Payment Plan, a financial-statement plan, hardship status or an offer. Each is compared in our relief by balance size guide.
- Ask for release in the same call. Name the IRC 6343 ground and send proof. Ask the IRS to send the release to the client.
- Protect the next payment. Stay current on new tax filings and estimated payments. A new unpaid balance can put a payment plan at risk of default, which brings levies back.
Most sole proprietors with balances under the plan limits can do this themselves. A representative helps when a revenue officer is involved, several clients have been levied, payroll taxes are unpaid, or a business entity owes more than the Simple Payment Plan allows. Global Gate Tax Relief offers a free, no-obligation consultation; if it takes your case it files Form 2848, reviews your IRS transcripts and quotes a flat fee upfront. In urgent levy cases it can often act within 24 to 72 hours of engagement, though release timing depends on the IRS. Request a free case review or call 1-877-800-8180. If you received the final notice recently, start with our 30-day final notice plan.
Frequently asked questions
Yes. After the required notices, the IRS can serve a notice of levy, usually Form 668-A, on a client or customer. The client must send the IRS the amount it owes you when the levy arrives, and it is then released from owing you that amount.
Usually not. A Form 668-A levy reaches what the client owes you when it is served, plus future payments you already have a fixed right to. Fees and commissions treated as wages are different: a Form 668-W levy on them is continuous until released.
The client can become personally liable for the amount it should have surrendered, up to the tax owed, plus costs and interest, and a 50 percent penalty if it had no reasonable cause (IRC 6332(d)). Clients almost always comply.
A platform that owes you money holds property of yours, so the general levy rules apply to it like any other payer. The IRS has not published platform-specific levy guidance that we could verify, so check the levy form you or the platform receives.
It applies to individuals, including sole proprietors, because the rule is about an individual’s basic living expenses. A corporation or LLC with its own balance generally has to rely on other release grounds, most often a payment plan.
Call the number on the levy or your revenue officer, and show a release ground: full payment, a payment plan, hardship (individuals) or a levy issued improperly. The IRS issues Form 668-D to release it. The Taxpayer Advocate Service can help if the IRS does not act.
Sources
- IRS: What if I get a levy against one of my employees, vendors, customers or other third parties?
- IRS: Levy
- IRS Publication 594, The IRS Collection Process (Rev. 1-2026)
- IRM 5.11.5, levies on wages, salary and other income (5.11.5.3)
- IRM 5.11.4, Bank Levies
- IRM 5.11.2 (economic hardship release, 5.11.2.3.1.4, rev. 12-21-2020)
- 26 CFR 301.6343-1, Requirement to release levy and notice of release
- 26 U.S.C. 6331, Levy and distraint
- 26 U.S.C. 6332, Surrender of property subject to levy
- 26 U.S.C. 6343, Authority to release levy and return property
- IRS: Payment plans; installment agreements
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This page is general information about IRS rules, not tax or legal advice for your situation. IRS figures change; each one links to its official source and the date we last checked it.