Can The IRS Garnish Your Wages?

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Yes, the IRS can garnish your wages if you owe back taxes — and it doesn’t need a court order to do it. This is legally called a wage levy, not a typical IRS wage garnishment, and the IRS must follow strict guidelines. This article will explain when it happens, what warning you’ll have, how much the IRS can take and, if you’re proactive, how you can stop it.

How IRS Wage Garnishment Works

The IRS levy process consists of multiple steps, so it’ll rarely be a surprise to you. Here’s what to expect.

From Unpaid Taxes to Wage Levy — What Happens First

1. Assessment of tax debt: The IRS begins by assessing your tax liability.
2. Initial notice and demand for payment (CP14): The IRS sends you a Notice and Demand for payment explaining how much tax debt you owe and requesting you pay it.
3. Follow-up notices (CP501, CP503): 
   • Final Notice of Intent to Levy + Notice of Your Right to a Hearing: If you don’t respond to the follow-ups, the IRS will send you a Notice of Intent to Levy and a Notice of Your Right to a Hearing. You may be able to arrange an installment agreement or approach the IRS with an offer in compromise, a type of settlement that would reduce your tax debt.
4. 30-day window before levy can begin: After sending the final notice, the IRS gives you a 30-day window to request a Collection Due Process hearing. That hearing would pause the collection process, so the wage levy wouldn’t immediately go into effect.  
5. Employer receives Form 668-W: If you don’t request a Collection Due Process or make another arrangement with the IRS, the IRS will send your employer Form 668-W, which requires your employer to withhold part of your pay and send it to the IRS until your tax debt is paid.

Why the IRS Doesn’t Need a Court Order

An IRS tax levy is a legal process in which the IRS can seize your property to pay your owed taxes. The IRS does not need to take you to court to implement a levy. According to statutory authority IRC §6331, it is lawful for the IRS to collect your owed tax by implementing a lev, and that levy may be made on your salary.

In contrast, a creditor garnishment, in which a third party like a bank withholds part of your wages to pay your debt, does require a court order. The creditor must file and win the lawsuit, and then obtain a court order to garnish your wages.

How Much of Your Paycheck Can the IRS Take?

Having part of your paycheck levied can be highly concerning, especially if you’re already on a tight budget. The IRS considers multiple factors when calculating how much of your paycheck to take.

What the IRS Looks At

There’s no one formula to determine how much of your paycheck the IRS will take. Instead, the IRS will weigh multiple factors:

• Disposable income — after mandatory deductions: The IRS considers your disposable income to be what remains only after mandatory deductions like federal, state, Social Security and Medicare taxes. Living expenses like rent or food aren’t deducted from your disposable income.  
• Tax filing status: The IRS also considers whether you file single, head of household or are married and file jointly or single.
• Number of dependents: The more dependents you claim on your tax return, the less of your paycheck the IRS can take.  
• Pay frequency — weekly, biweekly, monthly: The amount the IRS takes from your paycheck will be adjusted to reflect your pay frequency. If you’re paid monthly, a larger portion will be deducted from your paycheck than if you’re paid weekly.

The Exempt Amount — Why They Can’t Take Everything

The IRS can’t legally take your entire paycheck. The IRS exemption tables, Publication 1494, identify the amount of your paycheck that is exempt from being levied. The tables use factors like your pay period, tax filing status and number of dependents to calculate how much of your paycheck you must take home to cover your living expenses. The IRS must leave you this minimum amount.

The IRS exemption tables are usually less generous than creditor garnishment rules, which tend to leave you with more money to cover living expenses.

How Much the IRS Can Garnish — Example Scenarios

For example, if you are a single filer with no dependents who receives a biweekly paycheck, the IRS exemption tables require the IRS to leave you a minimum of $619.23 out of every paycheck. But if you’re a married filer filing a joint return and you have two children, the IRS must leave you at least $1,646.16 from every biweekly paycheck to cover your increased living expenses.

The amount changes depending on your pay frequency, too. A single filer with no dependents must receive at least $309.62 per paycheck when paid weekly. When paid biweekly, that amount increases to $619.23.

What Income the IRS Can — and Can’t — Garnish

While the IRS has the ability to levy several different types of income, certain income types may be exempt.

Income the IRS Can Levy

The IRS can levy a portion of your wages and salary. That can include your bonuses, commissions and overtime can also be levied.

If you’re a contractor or business owner, the IRS can levy some of your business income, and may seize parts of payments from your clients.

What’s Protected or Limited

The IRS can’t take all of your income, though. A portion of your wages from every paycheck are exempt so you can cover your living expenses.

If your wage levy is causing a hardship, such as if you can’t afford food, housing and medical expenses, you can call the IRS and provide financial information proving the hardship. The IRS may temporarily stop collection or arrange an installment plan.

An ongoing wage levy seizes a portion of your income from every paycheck. In contrast, a one-time levy might be placed on your bank account, freezing just the money that’s in your account at the time.

What Garnishment Doesn’t Cover — But the IRS May Still Take

An IRS wage levy seizes a portion of each paycheck, but the IRS may use other collection tools to take other types of assets to cover your tax debt. The IRS may freeze your bank account and seize your assets in the account at the time. The IRS can also apply any federal or state tax refund to your existing tax debt.

In some cases, the IRS may seize and sell other types of property, like vehicles, boats and even distributions from your retirement plans.  

How To Stop or Avoid IRS Wage Garnishment

There are ways to stop the IRS from garnishing your wages, but you have to be proactive.

Ways To Prevent a Wage Levy Before It Starts

Respond to any notices you receive from the IRS promptly. Responding to notices shows that you’re invested in finding a solution, and you may be able to set up an installation agreement where you pay the IRS a certain amount monthly. This type of agreement can be a major advantage compared to having your wages garnished, since you could potentially get a side gig or a part-time job to help cover the payments without worrying about part of those extra wages being garnished.

You can also request a Collection Due Process hearing. During the hearing, you may be able to challenge the debt and the potential wage levy. You can also propose another payment arrangement, like monthly payments.

How To Stop Garnishment Once It’s Started

If your wage garnishment has already begun, there are several ways to stop it:

• Installment agreement approval: If the IRS approves your proposed installation agreement, the wage levy would stop and you would be responsible for making ongoing payments on time.
• Currently not collectible: If you prove the levy is causing a hardship, the IRS may categorize the debt as Currently Not Collectible. The levy would be temporarily paused, but your debt would continue to accrue penalties. The IRS would periodically review your situation to see if you’re able to continue to make the payments in the future.
• Levy release: If you can prove that the levy is creating a hardship and preventing you from paying for basic living expenses, the IRS may release the levy.
• Paying the balance in full: Should you be able to pay the balance in full, the IRS will release your tax levy.  

Common Mistakes To Avoid

The prospect of an IRS wage garnishment can be frightening, but don’t ignore the mail you receive from the IRS. Additionally, don’t wait until your employer is notified of the wage levy — at that point, the levy will begin. If you take action early, you may be able to arrange a payment plan and avoid the levy entirely.

Similarly, don’t assume that the problem will just go away. The IRS can legally levy your wages, but they can also pursue additional actions, like seizing other property, including your vehicle or the assets in your bank account. This isn’t a problem that will go away on its own, but if you take a proactive approach and communicate with the IRS, you may be able to reach an arrangement that works better for you.   

Key Takeaways and Next Steps

The IRS can garnish your wages and isn’t required to get a court order to do so. However, the IRS must follow strict notice and appeal rules, so you’ll be aware that the process is starting. The IRS can’t take your entire paycheck, and acting early can give you more options to stop the wage garnishment. Carefully review any IRS notices you’ve received and seek help from a tax professional if you’re unsure of what to do.

Sarah Sharkey and Aja McClanahan contributed to the reporting of this article.

Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.

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