IRS Wage Garnishment and Bank Levies

When people say the IRS is "garnishing" them, they usually mean a levy on wages or on a bank account. Both take money directly from a source that holds your funds, but they work differently and have different timing. This page explains the mechanics so you know what to do in the days after one arrives.

Wage levies

A wage levy is sent to your employer on IRS Form 668-W. The IRS manual describes it as having "continuous effect," meaning it reaches future pay as well as the current paycheck until the IRS releases it. It can also reach bonuses, commissions and retirement income that you have a fixed right to receive.

What part of your pay is protected

Some of your pay is exempt. The exempt amount depends on your filing status, the number of dependents you claim and how often you are paid. The levy comes with a Statement of Dependents and Filing Status that your employer gives to you, and the IRS procedures say you should complete and return it within three days. If it is not returned, the exempt amount is figured as though you are married filing separately with no dependents, which protects less of your pay. You can give your employer a new statement later. IRS Publication 1494, sent with the levy, has the tables used to figure the exempt amount for the year. Court-ordered child support paid before the levy is also treated as exempt.

How a wage levy ends

The IRS releases a wage levy when the full balance is paid, when the collection period is about to expire, or when a release condition applies. The IRS says a levy may be released if it causes an immediate economic hardship or was issued in error, and in some cases when you make payment arrangements, such as a new installment agreement. When the debt is paid, the IRS sends the employer Form 668-D, the release of levy.

Bank levies

A bank levy is sent to your bank on Form 668-A. It takes effect when the bank receives it, and funds in the account at that date and time are frozen. Money deposited afterward is normally not affected. The Internal Revenue Code then gives a 21-day waiting period before the bank may send the money to the IRS, which the IRS says is meant to give you time to contact it and arrange payment or report errors.

If the account belongs to someone else, the owner or the owner's power of attorney should call the number on Form 668-A and explain why the funds belong to them, and the IRS may ask for proof. If a levy was an IRS error, you may be reimbursed for resulting bank charges on Form 8546, sent to the address on your copy of the levy.

Does the IRS need a court order?

Generally no, but the IRS must follow notice rules. In most cases that means a final notice with your right to a Collection Due Process hearing, which you have 30 days to request, before the first levy. See collection due process hearings and the LT11 and Letter 1058 notice. Some levies, such as a levy on a state tax refund, follow different notice rules.

Ways to stop or limit a levy

1. Pay the balance, if you can.
2. Set up a payment plan and ask the IRS to release the levy.
3. Request hardship treatment. If the levy leaves you unable to meet basic living expenses, ask for a release and consider currently not collectible status.
4. Show the levy is wrong. Send proof if the tax was already paid or the account or income is not yours.
5. Request a hearing if you are still within the 30-day window from the final notice.
6. Ask the Taxpayer Advocate Service for help if an immediate hardship is not being addressed.

Our page on tax debt relief options compares the payment alternatives.

Common mistakes

• Assuming a frozen balance is already gone. The money is held for 21 days, and a prompt call can still change the result.
• Ignoring a final notice, then being surprised by a levy.
• Not returning the Statement of Dependents to the employer on time.

How we can help

We can read the notice, determine which deadline applies, contact the IRS about a release, request a hearing, set up a payment plan or hardship request, and prepare documents showing an error or ownership problem. We cannot promise the IRS will release a levy, but we can make sure the facts and deadlines are handled promptly.

Read more about IRS liens and levies or contact us.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.