TIGTA's 2025 Review Reveals Levy Compliance Issues: What Taxpayers Need to Know

The Treasury Inspector General for Tax Administration (TIGTA) has released its annual review examining whether the IRS properly followed legal guidelines when issuing levies during the period from July 1, 2023, through June 30, 2024. While TIGTA found the IRS acted properly in over 99% of levies issued, there were significant violations that affected hundreds of taxpayers and resulted in over $900,000 in improper collections. These violations highlight how important it is for taxpayers to understand their collection due process rights.

What Are Collection Due Process Rights?

When taxpayers owe delinquent taxes, the IRS has the authority to seize assets directly from financial institutions and other third parties through a levy. However, the IRS Restructuring and Reform Act of 1998 established important protections for taxpayers. This law requires the IRS to notify taxpayers of the impending levy at least 30 calendar days before it is issued and inform taxpayers of their right to request a Collection Due Process (CDP) hearing. During a CDP hearing, taxpayers can challenge the appropriateness of collection actions, raise spousal defenses, and offer collection alternatives.

Key Findings from the 2025 Review

TIGTA reviewed levies issued by Revenue Officers against more than 46,182 taxpayers and identified 357 instances of noncompliance that resulted in potential violations of taxpayers' rights. These violations fell into four main categories:

Failure to Provide CDP Notice

The most significant violations included 43 cases where taxpayers were never notified of their CDP rights, resulting in $442,555 in improper levy payments to just four taxpayers. In these cases, taxpayers never received the required CDP notice before levy action, with management citing 38 instances of revenue officer errors and three technology errors where notice reversals didn't properly update system dates.

Levies During Pending Hearings

Revenue officers erroneously issued levies against 96 taxpayers while their CDP hearings were still pending, with four taxpayers losing $37,989 to prohibited levies. IRS management attributed 73 of these cases to revenue officer errors and 23 to a programming issue that allowed the system to generate levies despite open CDP hearings.

Untimely CDP Notices

Revenue officers failed to provide timely 30-day advance notice to 106 taxpayers, with 103 cases attributed to revenue officer errors and three to technology problems.

Missing Notices for Additional Assessments

When additional taxes were assessed, 112 taxpayers didn't receive required new CDP notices, with 111 cases resulting from system errors, leading to $275,948 in prohibited levy proceeds from 21 taxpayers.

Problems with Manual Levies

As evidenced above, TIGTA identified particular concerns with manual levies, which are prepared by revenue officers outside the automated system controls. Manual levies bypass automated safeguards that prevent improper levy issuance, placing the burden on individual revenue officers to verify compliance with CDP requirements.

Power of Attorney Notification Issues

The review also found that 472 taxpayers were potentially burdened when their authorized representatives didn't receive required copies of CDP notices. In a sample of 100 cases where taxpayers had valid powers of attorney on file, eight representatives failed to receive notices due to timing issues and revenue officer errors. This failure can have serious consequences, including loss of appeal rights to U.S. Tax Court and economic harm from levies that might have been prevented if representatives had received proper notice.

TIGTA’s Recommendations

IRS management agreed with three of TIGTA's four recommendations and partially agreed with one. The agency committed to revising procedures requiring revenue officers to verify CDP notice issuance before taking levy action and agreed to issue refunds to affected taxpayers, though it plans to seek authorization to retain funds when applicable.

The IRS also agreed to ensure employees and managers review prohibited levy actions during performance evaluations and take appropriate disciplinary action for intentional violations. Additionally, management committed to notifying taxpayers when their representatives were not properly sent CDP notices.

What This Means for Taxpayers

These findings highlight the importance of understanding your rights during IRS collection actions. Taxpayers facing potential levies should check that they received proper advance notice and have the opportunity to request CDP hearings. Those with authorized representatives should verify their representatives receive copies of all collection notices.

If you believe you were subject to an improper levy during the review period, you may be entitled to a refund of collected proceeds. The violations identified in this review demonstrate that even with generally high compliance rates, systemic issues can still impact taxpayer rights and result in significant financial harm. Contact us below to see how we can assist you.