How the IRS Decides Whose Assets to Levy First

IRS Tax Fighters • January 27, 2026

If your business owes back taxes or you’ve fallen behind on payroll deposits, you may wonder what the IRS will target first. Will they levy your business bank account? Your personal account? Your receivables? Your wages?


Once the IRS decides to enforce collection, they want fast money with minimal effort. Understanding how they prioritize levies can help you protect your business before enforcement hits.  If you are concerned about the IRS levying your business, you can contact us at IRS Tax Fighters by calling 281-962-0070.


Why the IRS Issues Levies

A levy allows the IRS to seize assets without going to court. They levy only after:


1. The tax is assessed


2. Multiple notices go unanswered


3. A Final Notice of Intent to Levy (LT11 or Letter 1058) is issued


4. You fail to resolve the matter within 30 days


By this stage, the IRS assumes you’re unwilling or unable to pay voluntarily, and they move to collect.


Priority #1: Bank Accounts (Business and Personal)

The IRS almost always starts with bank accounts because they provide immediate cash.


Why bank accounts are their first choice:


• They require almost no effort to levy


• They provide real dollars, right now


• They avoid the hassle of seizing physical property


• They can attach to both business and personal accounts


If you owe payroll taxes, trust fund taxes, or back business returns, both your corporate accounts and personal accounts may be levied, especially if the IRS is pursuing a Trust Fund Recovery Penalty (TFRP) against you.


Bank levies freeze the money in the account on the day the levy hits. You have 21 days to contest it or negotiate before the funds are sent to the IRS. But if you do nothing, your cash is gone.
Priority #2: Accounts Receivable (Your Clients’ Payments)
Next, the IRS often levies accounts receivable, redirecting customer payments straight to the IRS. This is one of the most damaging actions the agency can take because it instantly cuts off revenue. For businesses already struggling, an AR levy can halt operations overnight.

Priority #3: Wages and Personal Income
When individuals (owners, officers, shareholders, responsible persons) owe back taxes, or have been assessed TFRP, the IRS may levy wages or salary.
A wage garnishment is continuous, meaning:

• It stays on every paycheck

• It lasts until the debt is satisfied or a resolution is reached

• It can take 70%–100% of disposable income depending on filing status

Unlike bank levies (which are one-time), wage garnishments repeat automatically. This makes them an incredibly effective pressure tactic.
For business owners who take a W-2 from their own company, the IRS can garnish their pay the same as any employee.

Priority #4: Merchant Accounts and Third-Party Payments
If you’re paid through Stripe, PayPal, Square, Shopify, Amazon, or similar platforms, the IRS can levy those merchant accounts too. Because these systems process money daily, a levy can choke off revenue fast.

Priority #5: Business Equipment and Physical Assets
Contrary to popular belief, the IRS does not want to seize physical property. It’s time-consuming, expensive, requires storage, and often results in far less value than expected.

However, they will seize vehicles, machinery, tools, office equipment and inventory if they feel the business is ignoring them or acting in bad faith.

Asset seizures usually occur later in the collection process or when the IRS believes the business is intentionally avoiding payment.

Priority #6: Real Estate
Real estate is last on the list because:

• It requires court approval

• It’s slow

• It’s expensive

• It draws public scrutiny

But it does happen, especially when payroll taxes or large liabilities are involved, or when a responsible person has significant equity in a home or rental property.

The IRS will file a federal tax lien long before a seizure occurs, but a lien is the first step toward that possibility.

Why Some Owners Get Hit Faster Than Others
The IRS considers:

• Whether payroll (trust fund) taxes are involved

• The size of the debt

• Whether a Revenue Officer is assigned

• A pattern of non-response

• Whether assets are being moved

• Previous compliance history

Payroll tax debts trigger the fastest and most aggressive enforcement.

Final Thoughts
A levy isn’t the starting point; it’s the end of a long series of ignored notices. Once levies begin, your options shrink dramatically. 

If you’re behind on payroll taxes or worried about a levy hitting your business bank account, receivables, or wages, contact IRS Tax Fighters to schedule a confidential consultation by calling 281-962-0070 today. We’ll intervene with the IRS, protect your assets, and negotiate a plan that keeps your business functioning before the IRS decides what to take next.