IRS wage garnishment rules detail how the Internal Revenue Service (IRS) can legally seize money from a taxpayer’s wages, salary, or commissions to recover overdue federal tax debts. This process, officially called a “wage levy,” allows the IRS to collect unpaid taxes directly from your paycheck without requiring a court order once certain legal notices and procedures are followed.

How Does IRS Wage Garnishment Work?

Before garnishment begins, the IRS initiates multiple formal steps. First, the IRS sends a Notice and Demand for Payment, informing you of the tax debt. If unpaid, you’ll receive a Final Notice of Intent to Levy, usually at least 30 days before the levy action. This notice explains your right to request a Collection Due Process (CDP) hearing to appeal or negotiate alternatives.

If unresolved within 30 days, the IRS issues Form 668-W, Notice of Levy on Wages, which is sent to your employer. Your employer must then deduct the specified amount from your pay and remit it to the IRS. This process continues until your tax debt is fully paid, the levy is released, or the statute of limitations expires.

Key IRS Wage Garnishment Rules

  • No court order is needed for IRS wage garnishment.
  • Proper notices must be sent to taxpayers before garnishment begins.
  • Employers are legally required to comply with the levy.
  • A protected exemption amount based on filing status and dependents guarantees minimum income remains.

Difference Between Tax Lien and Tax Levy

A tax lien is a legal claim the IRS places on your property as security for unpaid taxes. It does not seize assets but can hinder selling property or obtaining credit. A tax levy, including wage garnishment, is the legal seizure of property or money to satisfy the debt. Wage garnishment is a specific levy targeting your paycheck.

How Much Can the IRS Garnish?

The IRS calculates an exempt amount to leave you with sufficient income for basic living expenses, based on the IRS’s wage withholding tables relating to your filing status and number of dependents. Only your disposable income above this amount is subject to garnishment. For example, if your weekly net disposable income is $1,000 with an exempt amount of $300, the IRS can levy up to $700 from that paycheck.

Who Is Affected?

Anyone with unpaid federal taxes who does not resolve the debt or negotiate payment may face IRS wage garnishment. This includes individuals, employees, and business owners personally liable for certain business taxes.

Options to Avoid or Stop Garnishment

  • Pay in Full: The fastest way to stop garnishment.
  • Installment Agreement: A payment plan can stop levies once approved.
  • Offer in Compromise (OIC): Settle for less than owed under qualifying circumstances.
  • Currently Not Collectible (CNC) Status: Temporarily halt collection due to financial hardship.
  • Request a Collection Due Process (CDP) hearing: Legally challenge the levy or negotiate alternatives.

Common Misconceptions

  • The IRS does not need a court order to garnish wages, unlike other creditors.
  • The IRS cannot garnish your entire paycheck; it must leave exempt income.
  • Employers cannot fire employees for a single wage garnishment.
  • Ignoring IRS notices only worsens the situation; prompt action is critical.
  • Bankruptcy may temporarily stop levies but does not eliminate all tax debts.

Frequently Asked Questions

Can a wage garnishment be stopped? Yes, by paying off debt, negotiating payment plans, or proving economic hardship.

How do I know my wages are garnished? You will receive a Notice of Intent to Levy, and your employer will be served Form 668-W.

What if I can’t afford garnishment payments? Contact the IRS to request adjustment or Currently Not Collectible status.

How long does garnishment last? Until the debt is paid, levy released, or collection statute expires (usually 10 years).

Can Social Security benefits be garnished? Yes, up to 15%, with specific exemptions to protect your living expenses.

Additional Resources

Understanding IRS wage garnishment rules is crucial for protecting your financial well-being and resolving tax debts efficiently. If facing levy or wage garnishment notices, consider consulting a qualified tax professional, such as an Enrolled Agent, CPA, or tax attorney, to explore the best resolution strategies.