Wage Garnishments
What is a wage garnishment/levy?
A wage garnishment, also known as a wage levy, is a legal action the IRS can take to collect unpaid taxes by directly withholding a portion of your paycheck. Wage garnishments are one of the IRS’s enforcement tools used after other attempts to collect unpaid taxes have been unsuccessful.
When this happens, your employer is required to send part of your wages to the IRS until your tax debt is paid in full. This reduces your take-home pay but allows the IRS to recover the amount owed without waiting for a lump-sum payment.
If the IRS levies (seizes) your wages, a portion of each paycheck will be sent directly to the IRS until one of the following occurs: you make alternative payment arrangements, your full tax debt is paid, or the levy is officially released. Not all of your wages will be taken—part of your income may be exempt from the levy. The exempt amount is based on the standard deduction and a calculated amount that considers your filing status and number of dependents.
When the levy is issued, the IRS sends your employer Publication 1494, which explains how to calculate the exempt amount. Your employer will also give you a Statement of Dependents and Filing Status to complete and return within three days. If you don’t return it, the IRS will assume you are married filing separately with no dependents, resulting in the lowest exempt amount. Additionally, if you have multiple income sources, the IRS may apply your exemptions to one and levy 100% of the wages from another source.
You can avoid an IRS levy by filing your tax returns on time and paying your taxes when they’re due. If you need more time to file, you can request an extension. If you're unable to pay the full amount you owe, pay as much as you can and contact the IRS to discuss your options. Being proactive is essential—don’t ignore IRS billing notices.
The irs website contains exensive information regarding levy’s, including what they are, how to respond to them, and how to avoid them in the future.
What to Do If a wage Garnishment is Levy Is Causing Financial Hardship
If a levy on your wages, bank account, or other assets is creating a financial hardship, contact the IRS immediately using the phone number listed on your levy notice or correspondence. If the levy is causing an immediate economic hardship—meaning it prevents you from meeting basic, reasonable living expenses—the IRS is required to release a wage levy and may release a bank or asset levy.
Please note: Releasing a levy due to hardship does not eliminate your tax debt. The IRS will work with you to arrange a payment plan or explore other options to help resolve your balance.
If you’re currently facing a levy and feeling overwhelmed or unsure of what to do, don’t wait—take action now. A levy can severely impact your income, bank account, or assets, and ignoring it will only make things worse. At our tax law firm, we help individuals and businesses resolve IRS collection actions quickly and effectively. Whether you need immediate relief, help negotiating with the IRS, or guidance through your options, we’re here to protect your rights and get you back on track. Contact us today for a confidential consultation and take the first step toward peace of mind.