Can the IRS Take My Paycheck? The Short Answer: Yes
Yes, the IRS can take your paycheck. It’s called a wage levy/garnishment.
But – if the IRS is going to do this, it won’t be a surprise. The IRS can only take your paycheck if you have an overdue tax balance and the IRS has sent you a series of notices asking you to pay.
If you don’t respond to those notices, the IRS can eventually file federal tax liens and issue levies. In 2017, the IRS issued more than a half million levy notices. Learn how to avoid IRS liens and levies.
The IRS will send a series of notices before taking your wages
Before the IRS levies your paycheck, the IRS must send these notices to your last-known address:
- A notice and demand for payment (notice numbers CP14, CP501, CP503)
- A notice of intent to levy (CP504)
- A notice of your right to a Collection Due Process (CDP) hearing (LT11/Letter 1058), via certified mail
If you get an LT11/Letter 1058, you’re at the last step before the IRS will start taking your paycheck.
This notice tells you that you can ask for a special hearing (called a CDP hearing). At the hearing, you can ask for a payment agreement or dispute the tax and penalties the IRS says you owe. But don’t delay. You have to request the hearing within 30 days of the date on the notice. If the IRS doesn’t hear from you within 15 days after the deadline, the IRS can take your paycheck.
In some cases, the IRS can bypass the CDP notice and go straight to a levy after the notice of intent. The IRS does this for some federal contractor levies, or when it thinks collection potential is at risk. If this happens, you can still request a CDP hearing after the IRS issues the levy.
A wage levy can take up to 25 weeks – but it could be faster
It can take from 11 to 25 weeks from the time you get the first IRS notice asking for payment to when the IRS issues a levy.
But, if you have an IRS revenue officer (an IRS employee who collects back taxes and/or pursues back tax returns), that timeline can speed up significantly.
The IRS can take some of your paycheck
When the IRS issues a levy, it will send a notice to your employer (IRS Form 668-W) requiring the business to send part of your paycheck to the IRS.
You’ll get to keep a certain amount of your paycheck. The IRS determines your exempt amount using your filing status, pay period and number of dependents.
For example, if you’re single with no dependents and make $1,000 every two weeks, the IRS can take up to $538 of your check each pay period. IRS Publication 1484 explains how to figure out the exempt amount.
On top of garnishing your wages, the IRS can levy your bank accounts, Social Security income and accounts receivable. The IRS will use the levied money to pay down your back taxes, but you can’t designate the payments toward any particular tax bill.
The levies stop when you get back in compliance
When the IRS issues a wage levy, the levy keeps going until one of these happen:
- You pay off your tax bill.
- You set up a payment agreement with the IRS (like a monthly payment plan or currently not collectible status).
- You prove to the IRS that the levy is creating a financial hardship.
- You file an offer in compromise.
- The IRS runs out of time to collect your back taxes.
- You enter bankruptcy.
- You prove to the IRS that the levy was wrongful or erroneous – meaning that the IRS levied money that wasn’t yours, or the IRS issued the levy in violation of procedure or law.
Once the IRS agrees to release the levy, you can speed up the process by asking the IRS to fax the levy release to your employer. Otherwise, you’ll have to wait for your employer to receive IRS Form 668-D by mail.
Get help from an expert
When the IRS is taking or about to take large portions of your check to pay down your tax bill, it’s important to act quickly.
A tax professional can help you figure out the best way to resolve your tax bill with the IRS, and deal with the IRS for you to get the levy removed. Learn about H&R Block’s Tax Audit & Notice Services, or get help from a trusted IRS expert.
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