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IRS Wage Garnishment (Wage Levy)

For salaried employees, the wage garnishment is a favorite and extremely effective tool the IRS has to collect a back tax debt.

What is an IRS Wage Garnishment (Levy)?

An IRS wage garnishment is an order directing your employer to withhold a specified amount from your pay and send it to the IRS. An IRS garnishment remains in effect until it is released or the debt is paid in full, and typically will leave you with very little money to live on until then.

How is the amount of an IRS Wage Garnishment (Levy) Determined?

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The IRS takes all of your paycheck except for a specific amount that is considered to be exempt from levy. The amount that the IRS will leave you after the garnishment is based upon the number of exemptions that you claimed at work on your W-4 and the frequency of your paycheck. The IRS will send a table to your employer with the garnishment that tells them how much to leave you.

The most important thing to remember is that this table tells them the maximum amount they can pay you, not the amount they can take through the garnishment.

This means that no matter how much money you make, the IRS is going to leave you with the same amount of take-home pay-- the amount that is exempt from levy. Anything above that amount goes to the IRS.

If you try to make up for an IRS garnishment by working overtime, all of the extra money that you earn from that overtime is going to be sent to the IRS via the garnishment -- you will get no extra money in your pocket because the garnishment instructs your employer to pay the IRS everything over a certain amount.

Because of this, there is not a set percentage that the IRS can take. If you don't make a lot of money, an IRS garnishment may only come out to them taking 30% of your pay. If you earn a lot of money at your job, the IRS garnishment may result in the government keeping 80% or 90% of your pay.

Calculator: How Much Can The IRS Garnish From My Wages?

How can I prevent and IRS Wage Garnishment (Levy)?

The IRS knows that very few people can live off of the amount of money that an IRS garnishment leaves you with. In fact, in many cases the amount they leave you with is so low that your take-home pay will be below the national poverty levels.

Like most levies from the IRS, the purpose of an IRS garnishment is to get your attention. The IRS will typically send out a garnishment if you are ignoring your tax problem, if you have missed deadlines, or if you are otherwise acting uncooperative.

This means the best way to prevent an IRS garnishment is to be proactive in the resolution of your tax problems. If you are demonstrating that you are making progress in getting into compliance, are keeping deadlines established with the IRS, and are communicating with the IRS to find a resolution to your debt then you should never encounter a garnishment.

How can I get a Wage Garnishment (Levy) Stopped?

Getting an IRS wage garnishment released will typically require that you work very quickly, because even one missed paycheck can really hurt your family's finances. A garnishment can typically be stopped if you can propose some kind of resolution to your debt that the IRS believes may ultimately be accepted.

Of course, you can't propose things like payment plans or an Offer in Compromise until you have filed all of your tax return, so the complete plan to release your garnishment has to start there. The IRS will usually release a garnishment if you can file all of your missing tax returns, complete a financial statement, and put a proposal on the table. That proposal can be a Payment Plan, Offer in Compromise, Currently not Collectible status, or something else.

What if I work as an Independent Contractor? Can an IRS wage levy attach to my pay?

Yes, the IRS can levy anyone who pays you. If you are an independent contractor, the levy would act in the same way as an Accounts Receivable levy rather than a garnishment. This means that there would be no money that is exempt from levy -- the entire amount of your pay would be sent to the IRS, leaving you no money to take home. Like a garnishment, an Accounts Receivable levy is continuous because it is considered to attach to the contract between you and the person paying you.

Can the IRS take other enforcement actions against me while I’m under a continuous wage garnishment (Levy)?

Yes, the IRS can garnish your pay with an IRS garnishment, and then turn around and take more money by levying your bank account. Technically, the IRS should not be able to do this. A garnishment provides that a specific amount of money is exempt from the garnishment, which is why you can still get a small paycheck when the IRS garnishes you.

In most cases, this money that was exempt on your paycheck is probably the same money that is now in your bank account. If you can prove to the IRS that the money they took in a bank levy was money that was exempt from a garnishment, then they will release the bank levy. However, they usually do this after the fact so the combination of a garnishment and bank levy can cause you a lot of problems in the meantime.