Wage Garnishment by the IRS: What They Can Take and How to Stop It
An IRS wage levy under Internal Revenue Code Section 6331 allows the government to continuously seize a large portion of a taxpayer’s paycheck without a court order, often leaving only a minimal exempt amount for living expenses. However, taxpayers have critical rights and remedies—especially through a timely Collection Due Process hearing under Internal Revenue Code Section 6330—which can stop or release the levy and enable alternatives like installment agreements or hardship relief. Acting early, before or immediately after the levy begins, is essential to preserving these options and minimizing financial damage.
TAX RESOLUTIONTAXIRS AUDIT DEFENSE
4/9/20263 min read
When the IRS levies your wages, it does not work like a typical creditor garnishment. There is no court order. There is no lawsuit. The IRS sends a notice to your employer, and your employer is legally required to comply. The result is that a significant portion of your paycheck goes directly to the IRS before you ever see it, and it continues every pay period until the debt is paid, a release is obtained, or the levy becomes unenforceable.
Under IRC Section 6331, the IRS can levy any property or right to property belonging to a taxpayer who owes a tax liability, including wages, salary, and other income. A wage levy is technically a continuous levy, meaning once it attaches, it applies to all subsequent paychecks without the IRS having to take any additional action. This is different from a bank levy, which is a one-time seizure of the funds in your account on the date the levy is served.
The amount the IRS takes from each paycheck is determined by a formula based on your filing status, the number of dependents you claim, and the standard deduction amount. The IRS uses Publication 1494 to calculate the exempt amount, which is the portion of your wages that cannot be levied. Everything above that amount goes to the IRS. For many taxpayers, the exempt amount is barely enough to cover basic living expenses, and the levied portion can be 50 percent or more of their gross pay.
Before the IRS can levy your wages, it must follow specific procedural steps. First, the IRS must assess the tax liability and send you a notice demanding payment, typically a CP14 or similar balance-due notice. Second, if you do not pay or make arrangements to pay, the IRS must send a Final Notice of Intent to Levy and Notice of Your Right to a Hearing, at least 30 days before the levy is issued. This notice is required by IRC Section 6330 and gives you the right to request a Collection Due Process hearing.
The CDP hearing is your most powerful tool for stopping a wage levy before it starts, or for getting a levy released after it has been issued. When you timely request a CDP hearing within 30 days of the final notice, the IRS is prohibited from proceeding with the levy while the hearing is pending. At the CDP hearing, you can raise any relevant issue, including proposing an installment agreement, requesting currently not collectible status, submitting an offer in compromise, or challenging the underlying tax liability if you did not have a prior opportunity to do so.
If you missed the 30-day window for a CDP hearing, you can still request an equivalent hearing within one year of the final notice. An equivalent hearing does not stop the levy, but it gives you access to the same range of resolution options and can result in a levy release if you reach an agreement with the IRS.
Even after a levy is in place, there are several ways to get it released. Entering into an installment agreement with the IRS is the most common path. Once an installment agreement is approved, the IRS is required to release the levy. Requesting currently not collectible status will also result in a levy release if the IRS determines that collecting would create an economic hardship. Filing a collection appeal through the Collection Appeals Program is another option, though it does not suspend the levy during the appeal.
If the levy is creating an immediate economic hardship, meaning you cannot pay for basic necessities like housing, food, utilities, and medical care, you can contact the IRS and request a levy release on hardship grounds. Under IRC Section 6343(a)(1)(D), the IRS must release a levy if it determines that the levy is creating an economic hardship for the taxpayer. The Taxpayer Advocate Service can also intervene on your behalf if the IRS is unresponsive or the levy is causing immediate harm.
One of the most common mistakes taxpayers make is ignoring IRS notices until the levy hits. By the time your employer hands you a paycheck with half your wages missing, you are already in a reactive position. The time to act is when you receive the Final Notice of Intent to Levy, or earlier. If you engage with the IRS proactively, whether through an installment agreement, an offer in compromise, or CNC status, the levy should never happen.
If the IRS is currently garnishing your wages, do not assume there is nothing you can do. There are multiple administrative and legal remedies available, and the right one depends on your specific financial situation, the amount you owe, and the time remaining on the collection statute. A tax attorney who understands IRS collection procedures can evaluate your options and take action to stop the levy while working toward a permanent resolution of the underlying debt.