Understanding How the IRS Can Garnish Your Wages

garnish wagesRegardless of your investment profile, if you owe taxes and penalties to the Internal Revenue Service (IRS), the IRS can pursue a wage levy.


Wage levies, or garnishments, mean the IRS can take a portion of each of your paychecks to pay your tax liability. If it happens to you—you may be wondering, “How did I get here?” Let us explain.


A wage levy is the legal right of the IRS to seize assets or money and apply it to your outstanding tax liability. As noted by the IRS, a levy is different from a lien. A lien places a hold on the value of a property—a levy takes the property.


Before the IRS pursues a wage levy, the agency first tries to connect with taxpayers through the mail. If a taxpayer does not respond after receiving reminder notices, the IRS will send a Final Notice of Intent to Levy along with information on the right to a hearing. For employers or others wondering if they must comply with an IRS Notice of Levy, the answer is “yes.”


The easiest way to avoid garnishment of your wages is to ensure your taxes are paid on a timely basis. If payment of taxes (or taxes and penalties) is beyond your current ability to pay, you can set up a payment plan with the IRS, consider an Offer in Compromise, or take out a loan. The interest payments on a loan are usually less than the penalty payments that accrue on tax debt.


Although you may have tossed the notices from the IRS, a wage garnishment is much harder to ignore. There are a number of conditions under which the IRS may release a levy on your paycheck, including:

  • The tax debt is paid, or you enter into a payment plan whereby the IRS agrees to release the levy during the payment period.
  • The IRS collection period ends before the levy is placed on your pay.
  • The existence of the levy creates economic hardship. To the IRS, economic hardship is the inability to pay for basic needs, including shelter, food, and the like. As well, the IRS may release the levy if it will materially assist you in paying off your tax debt.


When you fall behind on taxes, the consequences can be painful. If you are garnished for a tax liability, reach out to an experienced tax attorney to learn realistic options for your situation.


Chicago tax lawyers provide strong representation when you face a civil audit or tax controversy

The tax group at Robert J. Fedor, Esq., LLC represents business and individual clients responding to tax controversy, offshore tax allegations, or litigation over foreign bank accounts. When experienced tax advice is needed locally or internationally, call 800-579-0997 or contact us for a free consultation.

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