If your business owes back taxes or you’ve fallen behind on payroll deposits, you may be wondering what the IRS will target first. Will they seize your business bank account? Your personal assets? Your receivables or even your wages?
Once the IRS moves to enforce collection, they aim to get fast results with minimal effort. Knowing how the IRS prioritizes levies can help you take steps to protect your business before enforcement begins. If you’re concerned about the IRS levying your business, contact Simpler Tax Relief at 831-709-0132 or visit SimplerTaxRelief.com/contact.
Why the IRS Issues Levies
A levy allows the IRS to seize assets without the need for court approval. The IRS typically issues a levy after these conditions are met:
The tax is assessed.
Multiple notices are ignored.
A Final Notice of Intent to Levy (LT11 or Letter 1058) is sent.
You fail to resolve the matter within 30 days.
At this point, the IRS assumes you are either unwilling or unable to pay voluntarily, and they begin the collection process.
Priority #1: Bank Accounts (Business and Personal)
Bank accounts are almost always the first target for the IRS because they provide immediate cash.
Why the IRS targets bank accounts first:
They require minimal effort to levy.
They provide immediate access to funds.
They avoid the complications of seizing physical property.
The IRS can levy both business and personal accounts.
If you owe payroll taxes, trust fund taxes, or back business returns, both your business and personal accounts may be at risk, especially if the IRS is pursuing a Trust Fund Recovery Penalty (TFRP) against you.
A bank levy freezes the funds in your account on the day it’s applied. You have 21 days to contest the levy or negotiate before the money is transferred to the IRS. If you take no action, the funds will be gone.
Priority #2: Accounts Receivable (Client Payments)
The IRS often targets accounts receivable (AR) next, redirecting payments from your clients straight to them. This can be devastating for businesses that rely on incoming payments to stay afloat. For struggling businesses, an AR levy can halt operations almost overnight.
Priority #3: Wages and Personal Income
For business owners, officers, shareholders, or anyone deemed responsible for payroll taxes, the IRS may levy wages or personal income. A wage garnishment is continuous, meaning:
It’s applied to every paycheck.
It continues until the debt is paid off or a resolution is reached.
It can seize 70%–100% of your disposable income, depending on your filing status.
Unlike bank levies, which are one-time actions, wage garnishments repeat automatically, making them an extremely effective pressure tactic. Business owners who take a W-2 salary from their own company can have their pay garnished just like any other employee.
Priority #4: Merchant Accounts and Third-Party Payments
If your business uses platforms like Stripe, PayPal, Square, Shopify, or Amazon to process payments, the IRS can levy those merchant accounts as well. Since these systems handle daily transactions, a levy can quickly cut off your revenue flow.
Priority #5: Business Equipment and Physical Assets
While the IRS doesn’t typically target physical property first, they will seize business equipment, vehicles, machinery, tools, office equipment, and inventory if they believe you’re ignoring their requests or acting in bad faith.
Seizing assets usually happens later in the collection process, or when the IRS believes the business is intentionally avoiding payment. The process can be costly, time-consuming, and often results in a sale price far below the asset’s actual value.
Priority #6: Real Estate
Real estate is typically the last asset the IRS targets because:
It requires court approval.
It’s slow and expensive.
It can attract public scrutiny.
However, the IRS will seize real estate if payroll taxes or large liabilities are involved, or if a responsible person holds significant equity in a home or rental property. Before a seizure, the IRS will file a federal tax lien, which is the first step toward asset seizure.
Why Some Owners Are Targeted Faster Than Others
The IRS prioritizes collections based on several factors, including:
Whether payroll (trust fund) taxes are involved.
The size of the tax debt.
Whether a Revenue Officer has been assigned to your case.
A pattern of non-responsiveness.
Whether assets are being moved or hidden.
Your past compliance history.
Payroll tax debts often trigger the fastest and most aggressive collection actions.
Final Thoughts: Protect Your Business Before a Levy Hits
A levy isn’t the first step in the IRS collection process—it’s the result of a series of ignored notices. Once levies are issued, your options for resolution become much more limited.
If you’re behind on payroll taxes or worried about a levy impacting your business bank account, receivables, or wages, don’t wait until it’s too late. Contact Simpler Tax Relief for a confidential consultation. Call 831-709-0132 or visit SimplerTaxRelief.com/contact today.
Let us intervene with the IRS, protect your business assets, and negotiate a resolution that allows your business to keep operating while resolving your tax issues. The sooner you act, the better your chances of avoiding further complications.