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How to Stop IRS Tax Levy on Wages from Your Paycheck
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How to Stop IRS Tax Levy on Wages from Your Paycheck
Getting hit with an IRS tax levy on your wages can be scary. One day you get your normal paycheck, the next day the amount is way smaller thanks to Uncle Sam taking a big chunk of your hard-earned cash. What gives them the right to dip into your paycheck, anyway? And more importantly, is there anything you can do to stop the levy and keep more of your wages for yourself?
Well, the IRS does have the legal right to levy your wages if you owe back taxes. But don’t panic – there are some things you can try to stop the levy. This article will explain what wage levies are, how they work, and most importantly, what you can do to try to stop a levy on your paycheck.
What is an IRS Wage Levy?
A wage levy (also called a wage garnishment) is when the IRS orders your employer to withhold part of your wages and send the money to them to pay off back taxes you owe. The IRS can legally do this if:
- You owe back taxes (like from not paying enough during the year)
- You ignored previous notices from the IRS asking for payment
- You didn’t make payment arrangements (like setting up a payment plan)
Once the IRS levies your wages, they can take a hefty chunk of your paycheck – sometimes up to 70%! So it’s best to try to avoid getting to this point if possible.
How to Know if You’re Going to Get an IRS Wage Levy
The IRS doesn’t just show up out of the blue and demand your employer garnish your wages. There is a process they have to go through first:
- They will send you a notice that you owe back taxes and demand payment
- If you don’t pay, they’ll send another notice saying they will levy your assets if you don’t pay
- You’ll get a notice saying you have a right to a hearing to appeal the levy
- They will send a notice to your employer ordering them to garnish your wages
So if you’ve gotten any notices from the IRS about owing back taxes, don’t ignore them! Take action right away to try to avoid a wage levy.
What to Do if You Get an IRS Wage Levy
OK, so the worst has happened and your employer tells you the IRS has ordered them to garnish your wages. Don’t panic! Here are some things you can do:
1. Contact the IRS
Call the IRS phone number on the wage levy notice right away. Explain your financial situation and hardship getting by with less pay. Ask them to release the levy due to economic hardship. The IRS may agree to temporarily lift the levy if you can prove it’s causing real hardship.
2. Enter into a Payment Agreement
The IRS may release the wage levy if you set up a payment plan to pay off what you owe over time. Options include:
- Installment Agreement – Pay a monthly amount over several years
- Partial Payment Installment Agreement – Pay what you can afford each month
- Offer in Compromise – Settle for less than you owe if you qualify
3. Request a Collection Due Process Hearing
You have the right to appeal the levy and request a hearing with the IRS Office of Appeals. They will review if the IRS followed procedures and if the levy should be withdrawn.
4. Ask Your Employer to Adjust Your Exemptions
The IRS can’t levy more than a certain percentage of your wages, based on the number of exemptions you claim on your W-4. Ask your employer to increase your exemptions to reduce how much the IRS can take.
How to Avoid an IRS Wage Levy
Getting that first notice from the IRS that you owe back taxes can be scary. But it’s just a warning – at that point, the IRS can’t levy your wages. Here’s how to avoid it ever getting to that point:
- File your tax return on time every year
- Pay all taxes you owe by the deadline
- Make estimated quarterly tax payments if required
- Update your W-4 with your employer to have enough withheld
- Set up payment plans BEFORE levy notices are sent
And if you do get an IRS notice, don’t ignore it! Call right away to make payment arrangements. The sooner you take action, the more likely you can avoid a wage levy.
Dealing with the IRS and tax levies can be confusing and stressful. For personalized help getting your specific IRS wage levy stopped, talk to a tax professional. They can walk you through all your options based on your unique tax situation.
With some fast action, you may be able to avoid or remove an IRS wage levy and keep that hard-earned cash in your own pocket. Don’t be afraid to ask the IRS for help – avoiding financial hardship is in everyone’s best interest. So take control of the tax levy situation today and keep more of your paycheck where it belongs – with you!