IRS Levy on Rental Income – What Landlords in California Need to Know
Yes, the IRS Can Take Your Rental Income—Here’s What You Need to Do
If you're a landlord in California and received a notice that the IRS is attempting to levy your rental income, you need to act quickly.
Many property owners are surprised to learn that the IRS has the authority to seize rents directly from tenants or from property management companies.
This post explains how rental income levies work, how to protect your real estate investments, and how to resolve your tax debt before further enforcement occurs.
Can the IRS Levy Rental Income?
Yes. Under IRC §6331, the IRS can levy any third party who owes you money—including tenants. The IRS may:
- Send Form 668-W or 668-A to your tenant or property manager
- Demand that rent payments be redirected to the IRS
- Continue enforcement until your tax debt is resolved
Related: IRS Levy vs IRS Lien – What’s the Difference?
How Does a Rental Income Levy Work?
Here’s what usually happens:
- The IRS identifies you as a landlord with unpaid tax debt
- They send levy notices to your tenants or property manager
- Tenants are legally required to redirect rent payments to the IRS
- You lose cash flow, and your tenant relationships may be damaged
This can seriously disrupt your ability to:
- Cover mortgages
- Pay property taxes
- Fund repairs and maintenance
- Remain solvent
Related: IRS Levied My Business – What Are My Rights and Options?
What Triggers This Type of Levy?
- Unpaid personal or business tax debt
- Ignored IRS notices (e.g., CP504, LT11)
- Failure to enter a resolution like an Installment Agreement
- No response to the Final Notice of Intent to Levy
If the IRS can’t get payment from your bank accounts, they will go after income streams like rent.
Can Tenants Be Forced to Comply?
Yes. Tenants who receive an IRS levy notice are legally obligated to redirect payments—or risk personal liability. This can:
- Damage your tenant relationship
- Cause confusion or missed rent
- Trigger eviction or lease disputes
How to Stop the IRS from Taking Your Rental Income
1. Contact the IRS or Hire a Tax Professional Immediately
Respond quickly to the revenue officer or collections contact listed on the levy notice. A CPA can help you request:
- A levy release
- Currently Not Collectible status
- A payment plan or Offer in Compromise
2. Provide Financial Hardship Documentation
If losing your rental income jeopardizes your ability to:
- Pay mortgages
- Maintain properties
- Avoid foreclosure
…the IRS may agree to pause or release the levy.
Related: IRS Seized My Bank Account – Can I Get the Money Back?
3. File a CDP or CAP Appeal
If you’re still within 30 days of the Final Notice of Intent to Levy, file Form 12153 for a Collection Due Process (CDP) hearing.
If the levy already occurred, you may be able to request a CAP appeal for administrative review.
Related: IRS Collection Appeals Program (CAP) vs CDP Hearings – What’s the Difference?
We Help California Landlords Stop IRS Rental Levies
At Boulanger CPA and Consulting PC, we:
- Respond to urgent IRS levy notices
- File for levy release or appeal
- Protect rental cash flow
- Resolve the underlying tax issue so future levies stop
Call (657) 218-5700 or request landlord-focused assistance at www.orangecounty.cpa
FAQ: IRS Rental Income Levies
Can the IRS take rent directly from my tenant?
Yes. The IRS can send levy notices to your tenant or property manager.
What happens if my tenant doesn’t pay the IRS?
They could be held personally liable—and the IRS may escalate enforcement.
Will the IRS notify me before doing this?
Yes. You should receive a Final Notice of Intent to Levy. If not, the levy may be improper.
Can I stop the levy if I enter a payment plan?
Yes—most IRS levies can be released with an approved resolution.
📣 About the Author
Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, a boutique tax resolution firm based in Orange County, California and trusted by high-income individuals and business owners across Southern California.
He is the author of Defend What’s Yours: A California Taxpayer’s Guide to Beating the IRS and FTB at Their Own Game, available now on Amazon. The book offers a step-by-step plan for resolving IRS and FTB tax debt without losing your business, your home, or your peace of mind.
With over a decade of experience resolving high-stakes IRS and State tax matters, Marc brings strategic insight to complex cases involving wage garnishments, bank levies, unfiled returns, and six-figure tax debts. He is known for helping clients reduce or eliminate tax liabilities through expertly negotiated settlements and compliance plans.
Marc is a Certified Public Accountant licensed in California and Oklahoma and holds the designation of Certified Tax Representation Consultant. He is a member of the American Society of Tax Problem Solvers (ASTPS) — the national organization founded by the educators and practitioners who have trained thousands of CPAs, EAs, and tax attorneys in IRS representation strategy.
Every case is handled with discretion, proven methodology, and direct CPA-led representation — not call center scripts.
📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.
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