Now, the general rule about a wage levy, which is what we’re talking about here, or wage garnishment by the IRS is that it’s a continuous levy, unlike a bank levy. A bank levy is a one shot deal. The IRS is entitled to the money in the bank account on the date that the levy is processed by the bank. But a wage levy is a little bit different; it’s a continuous levy which, means the IRS is entitled to keep that levy in place until the liability is satisfied one way or the other.
So if you owe $50,000 to the IRS and they issue a wage levy, then it’s going to be a pretty chance that that levy is going to be on you for some period of time. It’s there to make your life miserable and it’s there to get you to come to the table to start communicating about the situation. The IRS allows you very little money to get by on, they keep most of your paycheck, and we’ll go into determining how much of that you get to keep here in just a minute.
But the way you need to deal or do to get rid of a wage levy is you need to get a copy of the actual levy notice. You’re going to get that from human resources or personnel at your company. Now make sure that when you get that, it’s going to be a three or four copy form (I forget how many copies come but it’s at least three or four). The top copy has along the bottom third, a place to fill in the names and social security numbers for your dependent exemptions. So, if you’re a husband, then you’re going to fill out your wife and your kids’ names and social security numbers.
The reason that the IRS has you do this is because you’re entitled to keep more of your paycheck in this levy situation for every exemption that you have. You need to make sure that all of your tax returns are filed. So if you’re missing tax returns, there’s nothing you can do short of filing those returns to get your wage levy released. You must have your tax returns filed. You need to call the phone number on the levy and speak to someone at the IRS. You’re going to speak to the issuer of the wage levy, and you need to have a plan of some sort of how to deal with the liability.
Two examples that come to mind are you need to come up with a plan for an installment agreement, so have an amount in mind for how much you’re going to want to pay, or you might qualify for hardship status. I go through hardship status and installment agreements in other videos in this series. Hardship status basically stands for the proposition that you have no ability to pay on a monthly basis because to force you to do so would constitute an economic hardship.
Another example that comes to mind is you might be able to get them to release your wage levy if you promise to file an offer in compromise.
There are two procedures that might help if you’re having trouble getting your wage levy released. You can call your local taxpayer advocate if you can’t get it released. The tax
payer advocate’s contact information is on the IRS website at IRS.gov.
Now most likely no matter what you do, you’re going to fill out form 433F or form 433A, depending upon which part of the IRS you’re dealing with. If you’re dealing with ACS, which stands for the Automated Collection System, and you’ll see those three letters up in the upper left-hand corner if they issued the levy, you’ll see it’s ACS, so you’re going to need to fill out a form 433F. And you can obtain that form from the IRS website at IRS.gov.
If you’re dealing with a Revenue Officer, you’re going to need to fill out a form 433A. If you’re dealing with a Revenue Officer and you’re self-employed or have a small business, you’re also going to need to fill out a form 433B.
IRS Publication 1494 tells you how much of your own paycheck you get to keep. For example, if you’re single or if you’re married, if you have one exemption, meaning yourself or if you have four or five because you have a large family and how often you get paid, there’s basically a table that tells you how much of your check that you get to keep. Now, this is after your withholdings and after your insurances, after any garnishments that you have and medical insurance and so on; IRS Publication 1494 will tell you how much of your own paycheck that you get to keep.