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Published: October 29, 2020   |   Last Updated: October 26, 2022

Return of Levy Proceeds or Seized Property

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The IRS has issued a levy to collect on the balance that you owe.  The levy proceeds have been received by the IRS and applied to your tax debt; however, you would like the IRS to consider returning the levied proceeds to you.

This notice or letter may include additional topics that have not yet been covered here. Please check back frequently for updates.

What does this mean to me?

The IRS issued a levy and the levied proceeds have been applied to your balance.  The IRS may consider returning all or a portion of the levied proceeds if any of the following conditions apply:

    • The levy was premature or not in accordance with administrative or procedures,
    • You now have an installment agreement for the tax liability included on the levy, unless the agreement provides otherwise,
    • Returning the payment will facilitate the collection of the tax liability, or
    • With your or the National Taxpayer Advocate’s (NTA) consent, returning the payment is in your (as determined by the NTA) and the government’s best interest.

How did I get here?

You have a balance on your tax account. A notice was sent to you previously letting you know how much you owe, when it was due, and how to pay. Since the IRS did not hear from you it continued with its collection process and issued a levy that attached to your funds.  The funds were sent to IRS and applied to your tax liability.

What are my next steps?

If the funds or property are not yet in IRS possession, see Levy Release.

Making an administrative return of property claim under IRC Section 6343(d):  If the funds or property are in IRS possession, your only recourse is to request that IRS consider returning the funds by filing an administrative return of property claim.  There is a time limit for making a claim.

  1. If the United States has not yet sold the specific seized property, a claim can be made at any time.
  2. If the property has been sold, the claim must be made within 2 years from the date of the Form 2433, Notice of Seizure, was given to the owner of the property.
  3. If funds have been turned over to the IRS or will be turned over to the IRS, the claim must be made within 2 years from the date the notice of levy.        

(Note: For levies and seizure made prior to March 22, 2017, the timeframe to file a claim is 9 months instead of 2 years.)

Your request for return of levied proceeds must be in writing and must include:

  1. The name, current address, and taxpayer identification number of the person requesting the return of the money or property purchased by the United States;
    2. A description of the property levied upon;
    3. The date of the levy;
    4. A statement of the grounds on which the return of the money (or property purchased by the United States) is being requested.

Your request must be made:

  1. At any time, property is in property is in possession of the IRS and has not yet been sold;
  2. Within two years of the date of the levy when the property has been sold by the IRS;
  3. Within two years from the date shown on the levy form.

Note: For levies and seizure made prior to March 22, 2017, the timeframe to file a claim is 9 months instead of 2 years.  These claims must have been filed before December 23, 2017.

Since levies on wages and Social Security benefits are ongoing, it is important to timely ask the IRS to return the proceeds based on when the levy started.

You claim must be send to the address on the levy form.

If your claim is rejected, you have the right to appeal through the Collection Appeals Program (CAP).

For more information, see Publication 5149, Making an Administrative Return of Property Claim Under Internal Revenue Code (IRC) Section 6343(d); Publication 594, The IRS Collection Process; and Publication 1660.

Collection Alternatives:  To prevent future levy action, you can enter into a collection alternative based on financial situation.

Some Special Situations

If the tax being levied is the result of an audit where you didn’t know you were audited (never got a notice), you didn’t meaningfully participate, or you disagree with the findings, you may be able to ask for audit reconsideration.

If the tax being levied stems from the filing of a joint return and you believe your current or former spouse should be solely responsible for an incorrect item or an underpayment of tax on the return, you may be eligible for relief as an Innocent Spouse.

Where can I get additional help?

Understanding your notice or letter

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If you still need help

The Taxpayer Advocate Service is an independent organization within the IRS that helps taxpayers and protects taxpayers’ rights. We can offer you help if your tax problem is causing a financial difficulty, you’ve tried and been unable to resolve your issue with the IRS, or you believe an IRS system, process, or procedure just isn’t working as it should. If you qualify for our assistance, which is always free, we will do everything possible to help you.

Visit www.taxpayeradvocate.irs.gov or call 1-877-777-4778.

Low Income Taxpayer Clinics (LITCs) are independent from the IRS and TAS. LITCs represent individuals whose income is below a certain level and who need to resolve tax problems with the IRS. LITCs can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court. In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee. For more information or to find an LITC near you, see the LITC page on the TAS website or Publication 4134, Low Income Taxpayer Clinic List.

Related Correspondence

  • Form 668-A, Notice of Levy (bank)
  • Form 668-B, Levy (seize a taxpayer’s property)
  • Form 668-D, Release of Levy / Release of Property from Levy (third party holders of taxpayers’ wages or properties)
  • Form 668-E, Release of Levy (seized taxpayer’s property)
  • Form 668-W, Notice of Levy on Wages, Salary, and Other Income (wage)
  • Form 2433, Notice of Seizure
  • Form 668-W, Notice of Levy on Wages, Salary, and Other Income (wage)
  • Letter 3975, Rejection of Request for Return of Levied Property
  • Letter 3975C, Rejection of Request for Return of Levied Property
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