How IRS Wage Garnishment Works
Under the IRS collection process, the IRS usually levies only after you leave a tax bill unpaid. It also sends a Final Notice of Intent to Levy and Notice of Your Right to a Hearing at least 30 days before.
Once it starts, a wage levy is continuous. The IRS gets part of each paycheck until you pay, make other arrangements, get a release, or collection time runs out. The collection period is generally 10 years from when the tax was assessed, but it can be extended.
Part of Your Paycheck Is Exempt
The IRS can’t take your whole paycheck. The exempt amount is based on the standard deduction (a set amount that lowers taxable income). It also includes an amount based partly on your dependents.
Return the Statement of Dependents and Filing Status from your employer within 3 days. Otherwise, the IRS figures your exempt amount as if you’re married filing separately with zero dependents.
Act Within 30 Days of a Final Notice
Before a levy starts, you can request a Collection Due Process hearing with Form 12153 within 30 days of the notice date. While a timely hearing is pending, the IRS generally can’t levy on the issue being heard.
Miss the deadline, and you can still request an equivalent hearing within one year. But the IRS may levy during it, and you can’t appeal to U.S. Tax Court.
Ways to Get an IRS Levy Released
Each option below can lead to a release if the IRS agrees. For some, like full payment or economic hardship, the IRS must release a levy once it determines the condition applies.
| Option | When it may fit |
|---|---|
| Pay in full | You can cover the balance |
| Payment plan | You can pay over time |
| Economic hardship | The levy leaves you unable to pay basic living expenses |
| Offer in Compromise | You can’t pay the full amount, even over time |
| Expired collection period | The collection period ended before the levy was issued |
Payment Plan
While your payment plan request is pending, the IRS generally can’t levy. If the plan’s terms don’t allow the levy to continue, the IRS must release it.
The simplest, streamlined long-term IRS payment plans require owing $50,000 or less in combined tax, penalties and interest, plus filing all required returns. Situations where larger amounts due can still qualify for payment plans, but will require more documentation. There is generally a set-up fee included for establishing long-term payment plans. Short-term plans for balances under $100,000 have no setup fee.
Economic Hardship and Currently Not Collectible Status
If the IRS agrees you can’t pay basic living expenses, it may mark your account Currently Not Collectible. It then generally won’t levy your income, but your debt remains and interest and penalties keep building.
Offer in Compromise
An Offer in Compromise can settle your debt for less than you owe, but only if the IRS accepts it. The IRS can’t issue a new levy while your offer is pending. You must have filed all required returns and can’t be in an open bankruptcy.
Who to Call About a Wage Levy
You can request each of these options directly from the IRS without hiring a tax debt relief company. Call the number on your levy notice, or call the IRS at 800-829-1040. Keep the notice handy.
If the levy is causing a hardship, the Taxpayer Advocate Service offers free, independent help at 877-777-4778.
Sources
- IRS, The IRS Collection Process, Publication 594
- IRS, Information About Wage Levies
- Taxpayer Advocate Service, Collection Due Process (CDP)
- IRS, How Do I Get a Levy Released?
- IRS, Payment Plans; Installment Agreements
- Taxpayer Advocate Service, Currently Not Collectible (CNC)
- Taxpayer Advocate Service, Levy Release
