Part of your paycheck is going to the IRS: what that means

Garnishment, levy: same thing?

If your payroll department told you the IRS is garnishing your wages, you are hearing the everyday word for something the IRS calls a wage levy. IRS materials use the word levy, and they use seize rather than garnish. This page uses both terms so you can find it, but when you talk to the IRS, say levy.

A wage levy is a legal demand sent to your employer to turn over part of your pay toward a tax debt. It is one kind of levy, alongside bank levies, and it comes after the IRS has gone through its notice steps. The IRS describes a levy as a seizure of property to satisfy a tax debt, while a lien is a claim against property that does not itself take anything.

How the mechanics work

A wage levy is continuous. According to the IRS internal guidance, it reaches wages you earn in the future until the levy is released, so a single pay period is not the end of it. This is the main difference from a one-time bank levy.

Part of your wages is exempt from the levy. How much depends on your filing status and the number of dependents you claim. The levy paperwork includes a Statement of Dependents and Filing Status that your employer gives you, and the IRS guidance says you must return it quickly. If you do not, the exempt amount is calculated as if you were married filing separately with no dependents, which usually protects less of your pay. Take that form seriously and ask your payroll department for it on the first day you hear about the levy.

Ways it can end

Federal law requires the IRS to release a levy in specific situations. These include payment in full, a liability that can no longer be enforced because time has run out, release that will help collect the tax, an installment agreement that covers the debt, and a levy that causes economic hardship.

For wage levies, the IRS page says that where the levy is causing immediate hardship, it must be released. To ask, call the number on the levy or related correspondence with your financial details ready. A release does not cancel the debt, and the IRS can ask for a payment arrangement. If a hardship request is denied, you can appeal under the Collection Appeals Program explained in Publication 1660.

Two scenarios

Consider a warehouse supervisor with two children whose paycheck is cut sharply in one pay period. She gets the dependents form back to payroll right away, then calls the IRS to explain her household costs and asks for a payment plan. If a plan is approved, the law points toward release of a levy that the plan does not allow.

Now consider a driver who changed jobs while the levy was still in place. He tells the IRS his current situation and asks how a release or a payment arrangement would work. In both cases, the first move is a phone call, not a stack of paper.

Your hearing rights

Before most levies, the IRS must send a written notice of your right to a hearing at least 30 days before the first levy for that tax period. A timely hearing request goes to the IRS Independent Office of Appeals, which considers collection alternatives. After the hearing determination, you generally have 30 days to petition Tax Court. If the date for requesting a hearing has passed, a late request may be considered an equivalent hearing, without court review. Your notice shows the exact dates.

How a written response fits

A hardship request goes more smoothly when you can state your income, your household and your essential expenses in an organized way. IRS Audit Defense Pro is software that helps you organize your facts and draft a letter you review and send yourself. It does not give legal or tax advice, and it cannot promise a release. If your employer or payroll office is unsure what to do, point them to the instructions on the levy form.

Frequently asked questions

Sources

• IRS: What is a levy?
• IRS: What if a levy is causing a hardship?
• IRS: Wage levy procedures (internal guidance)
• 26 U.S.C. 6343 (authority to release levy)
• 26 U.S.C. 6330 (notice and hearing before levy)

Related guides

• If the IRS has levied your bank accountAn IRS bank levy is a legal seizure of money in your account to pay a tax debt.
• Understanding an LT11 or Letter 1058 noticeAn LT11 or Letter 1058 is a Final Notice of Intent to Levy and Notice of Your Right to a Hearing.
• How to request a Collection Due Process hearingFind the Collection Due Process notice, note the deadline printed on it (generally about 30 days), complete Form 12153 with your reasons, attach what applies, and send it to the hearing address on the notice.
• How to set up an IRS payment planIf you cannot pay in full, the IRS offers short-term and long-term monthly payment plans.
• The Taxpayer Advocate Service: Help When an IRS Problem StallsThe Taxpayer Advocate Service is an independent office within the IRS that can help when an IRS problem is causing financial hardship, has gone unresolved for more than 30 days, or the IRS missed a promised date.
• What to do when you owe the IRS and can't pay it allIf you owe the IRS and cannot pay in full, file on time anyway, pay what you can, and contact the IRS about a payment plan, a pause in collection if you cannot cover basic living costs, or in some cases an offer in compromise.