Yes. You may be able to prevent IRS wage garnishment by addressing unpaid federal taxes before the IRS issues a wage levy. Options may include paying the balance, arranging an installment agreement, or requesting relief based on financial hardship. If the IRS has already begun taking money from your paycheck, you may still be able to have the levy released.
For Virginia taxpayers facing collection action, understanding IRS notices and responding promptly can make a significant difference.
How Does IRS Wage Garnishment Work?
The IRS can collect unpaid federal taxes directly from your wages through a legal process called a wage levy. Unlike most private creditors, the IRS generally does not need to obtain a court judgment before levying your paycheck.
Before issuing a levy, the IRS generally must assess the tax, send a notice demanding payment, and provide a Final Notice of Intent to Levy and notice of your right to a hearing at least 30 days before the levy. Certain exceptions apply.
Unlike many other wage garnishments, an IRS wage levy is continuous. Your employer must generally send the nonexempt portion of each paycheck to the IRS until the levy is released or the tax debt is satisfied.
Can You Stop an IRS Wage Levy Before It Starts?
If you receive an IRS collection notice, you may have several options for preventing a wage levy.
- Pay the outstanding balance. Paying the tax debt in full generally resolves the collection issue.
- Request an installment agreement. An approved payment arrangement generally prevents new levies as long as you comply with its terms, subject to statutory exceptions.
- Apply for an offer in compromise. If you qualify, the IRS may agree to settle your tax debt for less than the full amount owed. Levy restrictions generally apply while a qualifying offer is pending.
- Request Currently Not Collectible status. If paying your tax debt would prevent you from meeting necessary living expenses, the IRS may temporarily suspend collection.
The appropriate approach depends on your financial circumstances, the amount owed, and where the IRS is in the collection process.
What If the IRS Is Already Garnishing Your Wages?
An existing wage levy does not necessarily mean you have exhausted your options. The IRS may release a levy under certain circumstances, including when the debt is paid, a qualifying installment agreement is established, or the levy creates an economic hardship.
You can contact the IRS to request a release and provide financial information supporting your request. Documentation may include income records, housing costs, medical expenses, and other necessary living expenses.
A levy release does not erase the underlying tax debt. You may still need to establish a payment arrangement or pursue another resolution to prevent additional collection action.
How Much of Your Paycheck Can the IRS Take?
The IRS generally cannot take all your wages through an ordinary wage levy. A portion is exempt based on your filing status, eligible dependents, and applicable IRS calculations.
Your employer will provide a Statement of Dependents and Filing Status, which you must return within 3 business days. Failing to complete it can reduce the amount protected from the levy. The exempt amount is calculated using IRS Publication 1494, and the applicable figures may change annually.
Can You Appeal an IRS Wage Garnishment?
Yes. If you receive a Final Notice of Intent to Levy and notice of your right to a hearing, you generally have 30 days to request a Collection Due Process hearing. A timely request ordinarily suspends the proposed levy while the appeal is pending.
During the hearing, you may be able to challenge collection procedures or propose alternatives, such as an installment agreement. Other appeal procedures may be available if the levy has already begun.
Because appeal rights and deadlines depend on the notice received, review IRS correspondence promptly.
Take Action Before the IRS Takes More of Your Paycheck
At Surovell Isaacs & Levy PLC, we help clients in Fairfax and throughout Northern Virginia evaluate tax collection issues and determine appropriate steps to address unpaid federal taxes. If you are facing an IRS wage garnishment, contact us today.
Posted in: Tax Controversy