How an IRS Wage Levy Starts
A levy is a legal seizure of your property to satisfy a tax debt. It’s different from a lien, which is a legal claim that secures the debt without taking the property.
You’ll get warnings first. The IRS usually levies only after it:
- Assesses the tax and sends you a Notice and Demand for Payment (your tax bill)
- Sees that you neglected or refused to pay
- Sends a Final Notice of Intent to Levy and Notice of Your Right to a Hearing at least 30 days before the levy
- Gives you advance notice that it may contact other people about your debt (called Third Party Contact). This is not required, but is sometimes part of the process.
There are exceptions to the IRS giving advance notice, including jeopardy situations and certain state refund levies.
The IRS can deliver that final notice in person or mail it by certified or registered mail to your last known address. Besides wages, the IRS can levy bank accounts and retirement accounts, among other property.
How Much of Your Paycheck the IRS Can Take
How the Exempt Amount Is Figured
The exempt amount is the portion of your pay the IRS can’t take. Under the IRS wage levy rules, it’s based on the standard deduction plus an amount tied partly to your number of dependents for the year the levy is served. It’s calculated per pay period (weekly, biweekly, monthly) from your filing status, standard deduction and dependents, using the Publication 1494 table. There is no fixed percentage, unlike creditor garnishment.
Your employer will also give you a Statement of Dependents and Filing Status to complete and return within three days.
Situations That Change How Much Is Taken
| Your situation | What happens |
|---|---|
| You return the statement within three days | The exempt amount reflects your filing status and dependents |
| You don’t return it in time | You’re treated as married filing separately with zero dependents |
| You have other income sources | The IRS may apply your exemptions to that income and levy 100% of your pay from one employer |
| You get a bonus paid separately | The whole bonus can go to the IRS if your exempt amount was already paid that period |
| You pay court-ordered child support | You can ask the IRS to release the support amount from the levy if the order predates the levy |
Bonuses, commissions and fees all count as wages. To release child support from the levy, call the IRS number on Form 668-W.
How to Stop or Release a Wage Levy
Contact the IRS right away to resolve the debt and request a release. You can appeal before or after a levy using Publication 1660, Collection Appeal Rights. The IRS is required to release a levy when:
- You’ve paid what you owe
- The collection period ended before the levy
- Releasing the levy will help you pay the debt
- You enter an installment agreement (a plan to pay your balance over time) whose terms don’t allow the levy to continue
- If the IRS determines, after evaluation, that the levy causes economic hardship. Determining factor is that you can’t meet basic, reasonable living expenses.
- Your property is worth more than you owe and releasing it won’t hinder collection
If the levy creates immediate economic hardship, call the number on the levy. The IRS must release it and will usually ask for your financial information. A release doesn’t erase your balance, and the IRS can reissue the levy.
What to Do Next If Your Wages Are Levied
Once a levy starts, take these steps:
- Return the Statement of Dependents and Filing Status to your employer within three days.
- Call the IRS number on your levy to discuss a release or a way to pay.
- Ask about an installment agreement if you can’t pay in full, and learn how an IRS payment plan works.
- Check whether tax debt relief options are legitimate if you’re considering outside help.
