Federal Government Buyout Repayment (IRS Form 12311): Appealing a Levy

IRS Form 12311 is the “Notice of Intent to Levy and Notice of Your Right to a Hearing” — the letter the IRS sends to warn you it plans to seize your property for an unpaid tax debt. You have 30 days from the date printed on the notice to request a Collection Due Process (CDP) hearing, and you make that request on a different document, Form 12153. Miss the 30 days and you lose the right to have the U.S. Tax Court review the IRS’s decision.¹

You may see this same notice labeled Letter LT11 or Letter 1058. The letter number changes; the response is the same.²

Why the Notice Arrived

Before the IRS can send this notice, three things must already have happened. The agency assessed the tax and formally recorded what you owe. It sent a Notice and Demand for Payment to your last known address. And at least ten days passed after that demand without full payment. The notice itself must arrive at least 30 days before any actual levy, delivered by certified or registered mail, left at your home or business, or handed to you in person.³

If any of those steps didn’t happen, the levy may be procedurally invalid. You can raise that at the hearing.

What the IRS Can Take

A levy under this notice can reach almost anything you own or are owed. That includes bank accounts, wages, Social Security benefits, retirement distributions, rental income, accounts receivable, commissions, and the cash value of life insurance policies.⁴ Physical property is also reachable: your home, car, boat, business equipment, and inventory can be seized and sold.⁵

Two mechanics matter in the short term. A bank levy freezes the funds for 21 days before the bank sends them to the IRS, and that waiting period is the window to contact the agency, correct errors, or arrange payment.⁶ A wage levy, by contrast, is continuous: the employer withholds part of every paycheck until the debt clears or the levy is released.⁴

ERISA-qualified retirement plans such as 401(k)s and IRAs are not protected from IRS levy the way they are from private creditors. A levy-forced distribution is exempt from the 10% early withdrawal penalty, but you still owe ordinary income tax on the amount.⁷

Property the IRS Cannot Take

Federal law carves out categories of property that no levy can reach:

Necessary clothing and schoolbooks for you and your family.
Household goods, furniture, fuel, provisions, and personal effects up to $6,250 in value.
Books and tools of your trade up to $3,125 in value.
Unemployment benefits under any federal or state program.
Workers’ compensation benefits.
Wages needed to comply with a child support order that predates the levy.
Service-connected disability payments, public assistance under Titles IV and XVI of the Social Security Act, and certain railroad retirement payments.
Undelivered mail.
Your principal residence, unless the tax debt exceeds $5,000 and a federal judge approves the seizure.

The dollar limits are adjusted for inflation periodically.⁸

Every wage levy also leaves a protected slice of your paycheck untouched. The exempt amount depends on filing status, dependents, and pay period. For 2026, a single taxpayer paid weekly has at least $309.62 exempt plus $101.92 per dependent; married filing jointly paid weekly starts at $619.23 plus $203.85 per dependent.⁹

How to Respond: Form 12153

You do not fill out Form 12311. It is a notice, not a form you complete. Your response is Form 12153, “Request for a Collection Due Process or Equivalent Hearing,” available at IRS.gov.

Gather What You Need

The Form 12311 notice itself. You need the date on the notice, the tax periods listed, the types of tax involved, and the address for submitting hearing requests. That address is different from the payment address.
Your Social Security Number or Employer Identification Number.
If someone will represent you, a completed Form 2848 (Power of Attorney) unless one is already on file with the IRS.¹⁰

Complete the Form

Form 12153 runs two pages. Work through it section by section.

Items 1 through 6 collect your name, taxpayer identification number, current address, and a phone number with the best times to reach you. If filing jointly, include the second taxpayer’s information.
Item 7 asks for the type of tax and the tax periods. Copy these directly from your Form 12311 notice. Errors here can delay the hearing.
Item 8 is the basis for the hearing. Check the box that fits: disputing that you owe the tax at all, proposing a payment alternative, or claiming the IRS didn’t follow proper procedures. You can check more than one.
Item 9 is for collection alternatives — installment agreement, offer in compromise, or currently-not-collectible status. A short explanation of your finances strengthens the request.

Sign and date the form. A representative can sign for you if a Form 2848 is attached or already on file. There is no filing fee.¹⁰

Submit It on Time

Mail the completed form to the address on your Form 12311, not the IRS payment address. Fax is also accepted; call the number on your notice or 1-800-829-1040 to confirm the correct fax number.¹⁰ If mailing, use certified mail with a return receipt.

The 30-day clock starts the day after the date printed on the notice, not the day you opened the envelope.¹ Mail that sat in a pile for a week has already burned a quarter of your window.

What Filing on Time Gets You

A timely CDP request produces two immediate protections. The IRS must stop levy activity related to the tax periods in your request, and the ten-year statute of limitations on collecting the debt is paused while the hearing and any appeals are pending.¹ Interest and applicable penalties keep accruing on the balance, but no one is seizing your property.¹⁰

The IRS Independent Office of Appeals handles CDP hearings, usually by phone or correspondence. A settlement officer reviews whether proper procedures were followed, considers alternatives you propose, and weighs the government’s collection interest against hardship. The IRS does not publish a fixed timeline; it depends on the case.¹¹

After the hearing, Appeals issues a Notice of Determination. If you disagree, you have 30 days from the mailing date of that determination to petition the United States Tax Court.¹² That right to judicial review exists only because you filed the original request on time.

If You Missed the 30 Days

You can still request an Equivalent Hearing within one year of the CDP levy notice, using the same Form 12153 and checking the Equivalent Hearing box instead.¹⁰ Appeals will review the case, but two protections are gone. The IRS can proceed with seizing your property while the equivalent hearing is pending, and you cannot petition the Tax Court if you disagree with the outcome. An equivalent hearing is better than no hearing, but it is a weaker position than a timely CDP request.

Payment Alternatives You Can Propose

At a CDP hearing you are not limited to arguing the tax is wrong. You can offer a way to resolve the debt that avoids seizure.

Installment Agreement

A monthly payment plan. Individuals who owe $50,000 or less in combined tax, penalties, and interest can qualify for a streamlined agreement without detailed financial statements. Businesses with $25,000 or less in trust fund taxes, or $50,000 or less without trust fund taxes, are eligible for simplified terms.¹³ While an installment agreement request is pending, the IRS is generally prohibited from levying.¹⁴

Offer in Compromise

An agreement to settle for less than the full amount. You must have filed all required returns and not be in an open bankruptcy. The application uses Form 656 with a detailed financial disclosure (Form 433-A for individuals, 433-B for businesses), a $205 non-refundable application fee, and an initial payment. Low-income taxpayers who meet IRS certification guidelines can have the fee and initial payment waived.¹⁵

Currently Not Collectible Status

If paying would prevent you from covering basic living expenses, the IRS can temporarily shelve collection. The agency reviews your income, expenses, and assets (typically using Form 433-F) against its allowable living expense standards. The debt does not disappear and interest and penalties keep accumulating, but active enforcement stops until your finances improve.

Economic Hardship Levy Release

If a levy is already in place and is preventing you from meeting basic living expenses, you can request an immediate release. For wage levies causing immediate hardship, the IRS is required to release the levy. For bank account levies, the agency has discretion and will review evidence. Expect to provide financial documentation.¹⁶

Getting Help

You can handle a CDP hearing yourself. Many people bring in a tax attorney or an Enrolled Agent, both of whom need a Form 2848 on file before the IRS will discuss your account with them. Tax attorneys typically charge $300 to $2,000 per hour for levy work; Enrolled Agents generally run $200 to $400 per hour.

If you cannot afford representation, the Taxpayer Advocate Service assists with cases involving financial hardship or systemic IRS errors. Low-Income Taxpayer Clinics, funded in part by the IRS but operated independently, provide free or low-cost help for taxpayers below certain income levels.

1
Office of the Law Revision Counsel. 26 USC 6330 – Notice and Opportunity for Hearing Before Levy
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Internal Revenue Service. Understanding Your LT11 Notice or Letter 1058
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Office of the Law Revision Counsel. 26 USC 6331 – Levy and Distraint
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Taxpayer Advocate Service. Levy/Seizure of Assets
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Internal Revenue Service. Levy
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Internal Revenue Service. Information About Bank Levies
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Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
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Office of the Law Revision Counsel. 26 USC 6334 – Property Exempt from Levy
9
Internal Revenue Service. Tables for Figuring Amount Exempt from Levy on Wages, Salary, and Other Income
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Internal Revenue Service. Form 12153 – Request for a Collection Due Process or Equivalent Hearing
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Internal Revenue Service. What to Expect from the Independent Office of Appeals
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United States Tax Court. Guidance for Petitioners: Starting a Case
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Internal Revenue Service. Simple Payment Plans for Individuals and Businesses
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Internal Revenue Service. Payment Plans; Installment Agreements
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Internal Revenue Service. Offer in Compromise
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Internal Revenue Service. What if a Levy Is Causing a Hardship