IRS Tax Problems: Back Taxes, Audits, Levies and Liens
The IRS collects unpaid tax in two different ways. A federal tax lien is the government’s legal claim against your property. A levy actually takes the property: it can garnish wages, take money from a bank account, or seize and sell other property. The IRS describes the difference in one line: “A lien is not a levy.”
Each guide below explains one IRS problem: what the IRS letter or form means, the deadline that matters, what the law requires the IRS to do, and the options taxpayers usually discuss with a representative. Every rule is taken from IRS.gov or the Internal Revenue Code and linked at the bottom of each guide.
Which IRS problem do you have?
IRS wage garnishment
Your employer received a levy and part of every paycheck is going to the IRS. The IRS notes that “Wage levies are continuous and a portion of your wages is exempt from levy.” The guide covers the notices that must come first, how the exempt amount works, and when the IRS must release a wage levy.
IRS bank levy
Your bank froze your account. According to the IRS, “If the IRS levies your bank, funds in the account are held and after 21 days sent to the IRS.” The guide explains what that 21-day window is for, how a levy release works, and what happens with joint accounts and wrongful levies.
Federal tax lien
You received a Notice of Federal Tax Lien, or a lien turned up during a home sale or refinance. The IRS says a lien “attaches to all of your assets (such as property, securities, vehicles) and to future assets acquired during the duration of the lien,” and that a filed notice “may limit your ability to get credit.” The guide covers release, withdrawal, discharge and subordination.
Back taxes
You filed but cannot pay the full balance. The IRS says “The failure to pay penalty is 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid,” and interest is added on top. The guide covers the CP14 to LT11 notice sequence, payment plans and their 2026 fees, and the 10-year collection period.
Unfiled tax returns
One or more years were never filed. The IRS warns that if you fail to file, “we may file a substitute return for you” that “might not give you credit for deductions and exemptions.” The guide covers the failure-to-file penalty, the notices for missing returns, and how many years the IRS usually asks for.
IRS audit
An audit letter arrived. The IRS says “Selection for an audit does not always suggest there’s a problem” and that it will “notify you by mail. We won’t initiate an audit by telephone.” The guide covers the three audit types, the time limits, your rights, and the 30-day and 90-day letters.
Payroll taxes and the trust fund recovery penalty
A business is behind on withheld employment taxes. The Internal Revenue Manual calls the trust fund recovery penalty “an additional means of collecting unpaid trust fund taxes when taxes are not fully collectible from the company/business that failed to pay the withheld taxes.” The guide covers deposit penalties, who the IRS treats as responsible, payroll companies, and business payment plans.
IRS criminal investigation
A special agent has made contact, or a civil exam has stopped. The Internal Revenue Manual draws the line plainly: “Avoidance of tax is not a criminal offense.” The guide covers the criminal tax statutes and their limits, how a civil case is referred, what a special agent must say at a first interview, and the voluntary disclosure practice.
Passport denial or revocation
The IRS certified a tax debt to the State Department. The IRS says: “Generally, the State Department will not issue passports to taxpayers after receiving their delinquent debt certification from the IRS.” The guide covers the 2026 threshold, return-only passports for Americans abroad, what reverses certification, and expedited reversal for travel.
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The letter to watch for
Before most levies, the IRS sends a bill titled Final Notice of Intent to Levy and Notice of Your Right to A Hearing. The IRS’s own instruction on that letter is to contact the agency “right away.” That notice is also where Collection Due Process hearing rights begin, which the wage garnishment and bank levy guides explain step by step.
A levy can also be released after it is issued. The IRS states that a levy “may be released if it is causing an immediate economic hardship, or, it has been issued in error.”
Resolution guides
Talk to an IRS tax attorney about your notice
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Sources
IRS Circular 230 Disclosure: To ensure compliance with Treasury Department rules governing tax practice, any tax information contained on this website was not written and is not intended to be used, and cannot be used, for the purpose of avoiding any federal tax penalty. You should consult a licensed tax professional regarding your individual situation.
Results described on this website are not a guarantee, warranty, or prediction of the outcome of any tax matter. Every situation is different. Prior results do not guarantee a similar outcome. Article content reflects general information about federal tax procedure as of the last reviewed date and may not reflect subsequent changes in IRS policy, regulations, or case law.