IRS Wage Garnishment
An IRS levy on a taxpayer's wages, requiring the employer to send a portion of each paycheck directly to the IRS until the debt is paid or the levy is released.
Detailed Explanation
IRS wage levies are issued under IRC Section 6331 after a Final Notice of Intent to Levy and 30-day pre-levy hearing rights. The amount exempt from levy is small, often leaving as little as a few hundred dollars per pay period. Release procedures include filing missing returns, entering an installment agreement, qualifying for currently not collectible status, submitting an offer in compromise, or proving immediate financial hardship. Once released, the IRS issues Form 668-D to the employer.
Key Points
- A continuous levy on wages: the employer must remit a portion of each paycheck until released.
- Preceded by a Final Notice of Intent to Levy and a 30-day right to a Collection Due Process hearing.
- The exempt amount is small, often leaving only a few hundred dollars per pay period.
- Common release paths: file missing returns, set up an installment agreement, request Currently Not Collectible, or submit an offer in compromise.
- Release is communicated to the employer on Form 668-D.
Practical Example
A taxpayer who ignored prior notices has the IRS issue Form 668-W to her employer, leaving her with only about $500 of each paycheck. After a CPA quickly files her two missing returns and sets up a streamlined installment agreement, the IRS issues Form 668-D releasing the garnishment, restoring her full paycheck going forward.
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Learn about IRS & State Tax ResolutionRelated Terms
Federal Tax Lien
A statutory claim by the IRS against all property and rights to property of a taxpayer with assessed but unpaid federal tax debt.
IRS Installment Agreement
A formal payment plan with the IRS that allows taxpayers to pay tax debt over time, monthly, instead of in a single lump sum.
Offer in Compromise (OIC)
An IRS program that allows qualifying taxpayers to settle tax debt for less than the full amount owed, when full payment would create a financial hardship.
CP2000 Notice
An IRS notice proposing changes to a tax return based on information returns (W-2s, 1099s) that do not match what the taxpayer reported.
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