An IRS levy was served on our customer. Can we still collect that invoice ourselves?

A levy served on a customer can attach the business's rights to payment subject to the applicable rules. The business should not simply collect or redirect the same covered receivable as though the levy did not exist. Which obligations are reached depends on the levy and the rights existing when it is served.

A specific business-owner situation

A customer tells the business that the IRS directed payment of an outstanding invoice to the government. The company needs the actual levy and account details before giving conflicting instructions.

Illustrative example, not a client result.

What to establish before filing

1. Obtain the levy information and affected invoices.
2. Identify existing payment rights and amounts.
3. Seek specialist review of any error release or dispute.

Which fact changes the answer?

An existing right to payment differs from a genuinely new obligation arising later. The type of levy and underlying contract determine its reach.

A mistake to avoid

Do not assume a levy on a customer automatically covers every future transaction indefinitely.

Records that support the decision

• Customer contract.
• Receivable ledger.
• Levy and customer correspondence.

The decision to document

Coordinate with a tax-resolution specialist and keep the customer ledger aligned with amounts paid to the IRS rather than attempting an informal workaround.

Tax collection disputes and debt settlement require a tax-resolution specialist. AE focuses on proactive planning, tax preparation, amendments and real estate tax strategy.

Business-owner tax planning and preparation scope · Discuss advisory scope with AE

Related questions

• The IRS returned our business offer in compromise. Do we have the same appeal rights as a rejection?
• Our business assets are fully depreciated. Can we show zero value on an IRS collection financial statement?

Sources and editorial context

• IRS Publication 594: collection process and rights

General educational information prepared with AI assistance. No individual professional review is claimed. Apply the relevant tax-year rules to the actual records. Editorial policy · AI disclosure.