A legal seizure of property by the Internal Revenue Service to collect unpaid federal taxes after required notices have been sent and the taxpayer does not resolve the debt.

An IRS levy is more than a warning or a filed claim. Unlike a tax lien, which attaches to property as security for the debt, a levy lets the IRS actually take money or assets. That can include wages, funds in a bank account, federal payments, business income, or, in some cases, vehicles and other property. Before levying, the IRS generally must issue a Final Notice of Intent to Levy and explain the right to a Collection Due Process hearing under federal law.

In real life, a levy can wreck cash flow fast. A frozen bank account can leave someone unable to pay rent, payroll, or medical bills, and a wage levy can keep hitting each paycheck until the debt is resolved. For someone dealing with an injury claim, that matters because settlement money or funds deposited after a settlement may be at risk if the IRS is actively collecting. A levy can also complicate negotiations with insurers, payment of treatment providers, and any plan to use settlement funds for recovery.

Pennsylvania does not have a special state rule that changes how a federal IRS levy works. But if an injury case is reduced or blocked under Pennsylvania's modified comparative fault rule, 42 Pa. Cons. Stat. § 7102, that can leave less money available to deal with the tax debt.