Issuing A Tax Levy
The Department may issue a tax levy against the wages or bank account of any taxpayer who has failed to pay their taxes after a Final Notice and Demand for Payment is issued. CDOR will usually send a Notice of Intent to Issue Tax Levy to the taxpayer's last known address before the tax levy begins. This is a courtesy letter to allow the taxpayer one final chance to pay their tax debt.
Note: You must remit payment-in-full or initiate an authorized payment plan by the due date provided in that letter. Once a levy notice is issued, it cannot be paused, reversed, or otherwise held for any reason.
Wage Levy
Once a tax levy notice has been sent to your employer, funds will be withheld from each paycheck until the balance is paid in full. CDOR generally sets the tax levy to be 25% of your disposable pay. Furthermore, if you file jointly with a spouse/partner, both party’s paychecks can be levied simultaneously – each at the 25% levy rate.
To stop a tax levy on wages, only a bank/cashier’s check or money order can be accepted, and the payment must pay the full balance due.
If the tax levy on wages causes a financial hardship, you may request a reasonable accommodation. To request an accommodation review, submit the following documentation:
- Form 6596: Statement of Economic Hardship
- Form 6597: Waiver of the Statute of Limitations
- Copies of your two most recent paycheck stubs (and spouse, if applicable)
- Contact info/fax number for your payroll department.
- All income tax returns must be filed. Submit any unfiled returns with your request for accommodation.
Submit all documentation to:
Colorado Department of Revenue
Collections
P.O. Box 17087
Denver, CO 80217-0087
Bank Levy
Once a notice of Tax Levy is sent to your bank/financial institution, funds will be withdrawn from your account. This one-time transaction can be made to collect the full balance owed. If there are not enough funds in the account to pay the total outstanding debt, the transaction can withdraw the full amount saved in the account. This can also mean withdrawing funds from any jointly held account at the institution if the taxpayer is listed. Levied funds cannot be refunded.