A legal seizure of property to collect unpaid federal taxes.

"Legal" means the Internal Revenue Service has statutory authority, mainly under Internal Revenue Code section 6331, to take property after required notice procedures are followed. "Seizure" can mean taking money from a bank account, garnishing wages, or reaching other assets and rights to property. "Property" is broad: it may include personal accounts, business income, refunds, and sometimes money a person is about to receive from a lawsuit or insurance settlement. "To collect unpaid federal taxes" means a levy is not just a warning like a tax bill or a tax lien. A lien creates the government's claim; a levy is the step where the IRS actually takes the asset.

In practice, a levy can hit fast and create immediate cash-flow problems. Before most levies, the IRS must send a Final Notice of Intent to Levy and Notice of Your Right to a Hearing, and the taxpayer generally has 30 days to request a Collection Due Process hearing under IRC section 6330. That window can be critical for seeking an installment agreement, offer in compromise, or other relief.

For an injury claim, an IRS levy can affect settlement proceeds before the injured person ever uses the money for treatment, lost wages, or daily expenses. If a plaintiff has serious tax debt, a pending recovery may draw IRS attention, and a levy can complicate negotiations, disbursement, and overall case strategy.