Regular, hard-working taxpayers can be blindsided by an IRS Wage Levy. Many times despite required notices before such action, a taxpayer picks up their paycheck on payday, opens it expecting to see everything in order just as it has been every previous payday, and to their astonishment they find up to 80% of their expected pay seized by the IRS. You wouldn’t be human if that experience didn’t throw you into a panic. It’s not uncommon for a taxpayer to respond by calling the IRS and asking how the problem can be resolved – this can be a big mistake for the ill-informed. The purpose of a wage levy was original to get the taxpayer’s attention on the problem of their tax debt and seek an alternative solution. However, today the IRS looks at a wage levy as guaranteed payment on a debt you owe them. They view it as their money after all. What could possibly make a taxpayer think the IRS will “let go” of a wage levy without a fight?
So, you’ve discovered you’re wages are being levied, what do you do next? First and foremost with every Notice of Levy on Wages, Salary, and Other Income a Statement of Exemptions and Filing Status is included. A copy of Publication 1494, Table for Figuring Amount Exempt from Levy on Wages, Salary, and Other Income is also included. With this information, you need to make sure your employer is correctly reporting your filing status and claiming the proper number of exemptions to minimize the amount of your paycheck the IRS can legally take. If you are current on your income tax filing requirements and estimated tax payments (if required), as well as if you have a proper amount of federal withholding from your paycheck you have completed the foundational steps to getting your wage garnishment released. If you have not met these requirements your wage levy will not even be considered for the next step in the process until you do meet these requirements. Failure to get current means the IRS will levy your wages until your tax debt is paid in full.
Getting a wage levy released quickly is dependent on having all the required information ready for the IRS when they ask for it. A wage levy release in 2-5 days doesn’t include the time it will take to get this information together and on the proper form. The IRS is going to want your complete financial information on Form 433F before you call. Anytime you are giving your financial information to the IRS it is recommended you seek the services of a qualified representative (Attorney, CPA, Enrolled Agent), doing so will ensure you don’t make a critical error and keep as much of your hard-earned money as possible. Provided your financials are in order you will be able to get your wage levy released when an alternative solution to your tax problem is proposed and accepted by the IRS. Usually an installment agreement or “hardship” status. When provided financial information to the IRS be prepared to be required to substantiated your income and expense claims with 3 months of statements and records.