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Levies are usually one-time seizures of money or the right to receive money.  The vast majority of levies are issued to a taxpayer's business or personal bank accounts.  Levies are usually served on banks with a form 668-A.  There are a few important things to remember regarding levies:

• The IRS cannot issue a levy if you are in a payment plan or if you have a payment plan proposed;
• The IRS cannot issue a levy if doing so will result in undue hardship;
• Usually this is an argument raised after the levy has already attached to funds to secure a full or partial release of the funds;
• The IRS must provide several notices prior to issuing a levy, with the final notice usually being either a Letter 1058 or a LT11, although there are other letters.
• For IRS bank levies, the bank will hold the funds for 21 days before sending the money to the IRS.  This allows you time to secure a release of all or part of the money.  Three weeks may seem like a lot of time, but usually you are going to have to make several calls to the IRS and do a full financial analysis to secure a release.  It is important to start right away.
• IRS levies only attach to funds in the account on the date the levy was received.  If you deposit money the next day, you should be able to use that money to pay bills as normal.  Be extremely careful to make sure the IRS is the levying agency before putting money in the account.  Some states such as Florida put a permanent hold on the account and any money deposited in the future will also be levied.  You should also check with your bank because some banks have misinterpreted the law and will take all the money you deposit for 21 days.

A garnishment, unlike a levy, is a seizure against a source or stream of income.  Garishments will typically be ongoing in nature, attaching not only to funds payable on the date of the garnishment but to future payments as well.  For taxpayers will one source of income, this can be even more problematic than a levy since it will continue to capture funds as long as the income stream continues or until the debt is paid off.  Some sources typically garnished include wages and social security payments.  Garnishments are usually served using a form 668-W.

• The usual solution for a garnishment is to either enter a payment plan to get the garnishment released or to reduce the amount of the garnishment to the amount you would otherwise negotiate with a payment plan;
• Employers will usually have one full pay cycle to have the garnishment corrected.  For most employees that means 14 or 15 days to get the issue resolved before the garnishment actually starts collecting money.  Depending on the frequency of the payments from other sources, you may have more or less time.  Use that time to get the garnishment released;
• Like with a levy, the IRS cannot continue a garnishment if it will cause undue hardship, although the garnishment will remain in place until you have proven the hardship.
• Be sure to determine the source of the garnishment.  States each have different rules for whether they will release a garnishment.  Colorado, for example, will not release a garnishment once it is issued.  Your only chance with them is to get the garnishment reduced to the amount you can afford based on a financial analysis.