IRS Wage Garnishment: How an IRS Tax Wage Levy Works, How to Stop It


An IRS wage garnishment (IRS wage levy) is the deduction of money from an employee’s monetary compensation resulting from unpaid IRS taxes. Most likely this should not be a surprise as the IRS will only levy one’s wages after repeated letters and warnings about the taxes owed. The is one of the IRS’s most aggressive tax collection mechanisms and should not be taken lightly. The IRS would rather resolve taxes in a different manner but the IRS will levy when they feel the have run out of other options. It is important to understand how an IRS garnishment works to ensure you take the appropriate actions to avoid them or stop the IRS from taking your wages.


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Once you receive a notice of intent to levy you will have 30 days before the levy can legally take effect. Depending on your current financial and work situation a wage levy may be the most logical levy mechanism the IRS will use. If you do not act within 30 days to the notice, it is likely that the IRS will be contacting your employer and will require them to garnish and levy your wages to pay for the unpaid income tax liability that you have. This IRS wage garnishment will remain in place until the IRS has garnished enough of your wages to cover taxes owed unless another form of IRS settlement has been made and you get into compliance with the IRS.

It is important to know that the IRS would prefer you to settle your taxes in some other way than for them to levy your assets, even if means that you will settle for less than the total amount that you owe. Realize, that before any type of IRS wage garnishment release can be obtained you must get into compliance with the IRS. This means an unfiled taxes that you have must be filed for each year. If you are unsure what you have unfiled, contact the IRS but cautious not to disclose bank accounts, or other assets the IRS can get their hands on.

It is also recommend that you reach out to a professional but below are some ways you can either completely stop the garnishment of wages or negate the effect the levy has on you. The method you choose to use should be determined by your tax, work and financial situation. Remember, before any one of these options can be pursued all tax returns need to be filed.

Ways to Stop/Release your IRS Wage Levy

1. Pay the IRS in Full

Well, this is a "no brainer". If you had the money to pay the IRS, most likely you would have paid your income tax debt. Paying off the entire amount of taxes owed plus interest and penalties will immediately stop the garnishment. Most likely you have gotten into this situation because you did not have the taxes to pay. You can consider options such as borrowing from friends and family, selling an asset or assets to cover the tax liability or even refinance your home. If none of these options seem feasible that is OK because the IRS has many other options you can use to settle your taxes.

2. File for an Offer in Compromise (The Flat Fee Tax Service, Inc. preferred method)

When you receive an IRS notice of intent to levy the IRS mentions to pay in full or make an “alternative arrangement”. One alternative method they are referring to is an offer in compromise. You must owe more than $10,000 to qualify for an IRS Offer in Compromise. An Offer in Compromise is an IRS settlement that allows financially struggling taxpayers to settle their income taxes owed for a fraction of what is owed. This is a very difficult settlement method to receive from the IRS and they make sure that only people that are deserving of this type of settlement receive it. The filing for this type of settlement is fairly complicated and if you are considering using this method you should use a tax professional to help with it.

3. Enter into a Payment Plan

The IRS has many rules regarding "payment plans". There are rules if you owe less than $10,000. There are rules if you owe $25,000 or less. There are rules if you owe less than $50,000. There are rules if you owe $100,000 or more. You do not know the IRS tax code which is why you need an experienced IRS Tax Attorney.

If you owe less than $25,000, the IRS is not required to take a financial statement. So, the IRS will bully you into accepting an Installment Agreement that most likely will fail. The IRS prefers that people use payment plans to pay back taxes owed if they cannot pay in full. The most common form of payment plan is an installment agreement. With an installment agreement the IRS allows the taxpayer to pay back their taxes in monthly installments over a period of up to 3 years to pay back the amount owed. It is likely that you will be able to qualify for an installment agreement to stop your garnishment if you don’t have a history of defaulting on these sort of agreements. Once you are entered into an installment agreement the wage levy will be stopped and you will be considered in good standing with the IRS.


There may be times when you may not be able to use any of the methods mentioned above. If you cannot afford to have the IRS garnish your wages to pay for the taxes you owe then you will need to use a different route that may not solve your tax problem but it could negate the effects of the garnishment and let you keep as much money as possible until you find another solution or the statute of limitations on the debt expires. Below are some ways to negate the effects of a wage levy.

Ways to Negate the Effect of an IRS Wage Levy

Prove your IRS Wage Garnishment Causes Financial Hardship

If you can prove that the IRS wage levy causes financial hardship the IRS will temporarily pause collection actions until your financial standing has improved enough so they can collect. The IRS will not collect from you if their collections leave you unable to pay your other bills required for living. The only thing is, you must prove this to them. This can be done with a filing and providing financial records and pay stubs. It is a good idea to hire an experienced tax professional like the "best IRS help" team at Flat Fee Tax Service, Inc. when filing for this because they are well aware of the exact formula the IRS uses to calculate whether a person is eligible for hardship status. If you don’t meet the requirements they can likely find the next best method for you.

You Could Change Employers or Temporarily Quit Your Job

THIS IS NOT A GOOD IDEA BECAUSE THERE ARE SMARTER ALTERNATIVES. If you quit your job there will obviously be no income for the IRS to seize from that employer. You can then get another job and it will likely take several months for the IRS to find your new employer and for them to implement a levy with that company as well. If you temporarily quit your job and your employer notifies the IRS that you have quit the levy will be removed and the IRS will have to re-instate the garnishment once you get hired again and this could take several months for them to realize what has happened.

Reduce Your Income enough to be Declared Uncollectible (Currently not Collectible)

Say you do not qualify for hardship status under your current salary, if you cut back your salary enough then you could be below the national standards for required living expenses. This could work in your benefit if you have an employer that you are close with and they agree to pay you the amount that you have taken as a cut in sometime in the future after your tax problems have been resolved.

When it comes to dealing with an IRS wage garnishment it is important you act quickly to limit the effects of it. Once the IRS seizes money you will not get that money back. This is one of the harshest collection mechanisms used by the IRS and it is important you take the appropriate actions. Consider talking with a tax professional ASAP as they will quickly be able to determine the best course of action for your financial, work and tax situation.





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