IRS CP297: We Intend to Levy Federal Payments You Receive

The IRS is about to intercept your federal contractor payments or other federal income.

Your deadline

30 days to request a CDP hearing or establish a resolution

Federal contractor payments are critical business income. Once the levy begins, federal agencies redirect payments to the IRS. This can cause contract defaults and business damage.

How soon to act: Critical

What this notice means

CP297 is the business version of a federal payment levy notice. It means the IRS intends to intercept federal payments directed to your business — most commonly payments from federal government contracts, grants, or other federally-sourced business income.

For federal contractors, this is particularly serious because it not only affects cash flow but can trigger contract compliance issues. Federal agencies that receive a levy notice may question the contractor's financial stability.

CP297 triggers Collection Due Process rights. You have 30 days to request a CDP hearing and suspend the levy while your case is reviewed.

How it works

1
File Form 12153 (CDP Hearing Request) within 30 days to suspend the levy
2
Alert your federal contracting officer if necessary to prevent contract compliance issues
3
Establish a resolution (installment agreement or OIC) as quickly as possible

Other options

Contact a tax professional who understands business collection defense

If you do nothing

Intercept 100% of federal contractor and vendor payments
Continue the levy until the full balance is paid
Pursue additional levies on other business assets simultaneously
File a federal tax lien on business property

Which sounds like you?

Lien & Levy Release

Review response options before a federal payment levy begins

IRS Appeals & CDP Hearings

Request a CDP hearing to suspend the levy and negotiate

Installment Agreement

A payment plan typically results in levy release for business balances

Common questions

Can the IRS take 100% of my federal contract payments?

Yes. Unlike Social Security (capped at 15%), federal contractor payments are subject to 100% levy through the Federal Payment Levy Program. This can effectively shut down a federal contractor's cash flow entirely.