IRS Wage Garnishment

Wage garnishee is a legal process where an employer withholds a portion of an employee’s paycheck and sends it directly to a creditor to repay a debt. For most private debts, creditors must first obtain a court order. However, government agencies notably the IRS, can impose a wage garnishee without court approval, provided they issue proper notice and demand for payment.

In IRS cases, a specific portion of wages is garnisheed to cover unpaid taxes. Under federal law, most garnishees are limited to the lesser of 25% of disposable income or the amount exceeding 30 times the federal minimum wage. Exceptions apply for child support, student loans, and certain federal debts. Garnishee continues until the balance is paid, but it may be reduced or stopped through repayment plans, exemptions, or bankruptcy relief.

The IRS can initiate a wage garnishee when a taxpayer fails to pay their tax debt.

The IRS wage garnishee process typically follows these steps:

1. Tax Debt Notification: The IRS will notify the taxpayer of an outstanding tax debt.
2. Demand for Payment: If the taxpayer does not respond or arrange payment, the IRS sends additional notices.
3. Final Notice of Intent to Levy: The IRS will issue a final notice, giving the taxpayer 30 days to pay or appeal.
4. Wage Garnishee Begins: If no action is taken, the IRS notifies the employer – issuing Form 668-W, and a portion of the taxpayer’s wages is withheld each pay period until the debt is satisfied.

Yes, there are exemptions. The amount the IRS can garnishee from your wages is limited based on your filing status and the number of dependents you claim. The IRS uses a wage garnishee exemption table to determine how much of your income is protected from garnishee, allowing you to retain a portion of your earnings.

Additionally, certain types of income are generally exempt from IRS wage garnishee, including:

• Social Security benefits
• Supplemental Security Income (SSI)
• State disability benefits
• Veterans’ benefits
• Unemployment benefits
• Workers’ compensation
• Certain pension and retirement benefits

Taxpayers may need to apply for these exemptions and provide appropriate documentation.

However, it’s important to note that the IRS has broader powers than most creditors. In some cases, especially involving unpaid federal taxes, the IRS can override certain protections and garnishee funds that would otherwise be exempt.

An IRS wage garnishee can have significant financial and professional consequences, including:

• Reduction in take-home pay, making it difficult to cover living expenses.
• Negative impact on credit scores.
• Potential inability to meet ongoing financial obligations, such as rent, utility bills, and court-ordered support payments.
• Strained employer-employee relationships due to employer involvement.
• Possible escalation to bank levies or property seizures if the debt remains unpaid.
• Limited legal protections compared to private creditors, allowing the IRS to bypass certain state-level safeguards.

To minimize these consequences, it’s crucial to take prompt action, such as responding to IRS notices, setting up a payment plan, or consulting an experienced tax attorney.

Wage garnishee and a levy are both tools the IRS uses to collect unpaid taxes, but they differ in how they operate.

Wage garnishee specifically refers to the IRS taking a portion of a taxpayer’s paycheck directly from their employer on a recurring basis. The amount withheld depends on factors like filing status and number of dependents. It continues each pay period until the tax debt is resolved or another arrangement is made. Employers are legally required to comply once notified by the IRS.

An IRS levy, on the other hand, is a broader legal action that allows the IRS to seize various types of assets, not just wages. This can include bank accounts, retirement funds, Social Security payments, vehicles, or even real estate. While wage garnishee is a form of levy, not all levies involve wages. The IRS must send proper notice before enforcing a levy, but it has the authority to repeatedly levy assets until the debt is fully satisfied. Certain exemptions may apply, but IRS powers often override protections that apply to private creditors.

Federal wage garnishee laws, as outlined in the Consumer Credit Protection Act (CCPA), set limits on how much can be garnisheed from wages.

Guidelines vary by state but generally include:

• Maximum percentage of wages that can be garnisheed: Under federal law (Consumer Credit Protection Act, CCPA), most creditors (excluding the IRS and child support orders) can garnishee up to 25% of disposable earnings or the amount by which weekly earnings exceed 30 times the federal minimum wage, whichever is lower. However, some states impose lower limits or prohibit garnishee for certain debts altogether.
• Requirements for notification to the employee: In most cases, employees must be notified before garnishee begins. However, IRS wage garnishees do not require a court order, and the IRS only sends a final notice before enforcement.
• Provisions for exemptions and appeals: Many states allow exemptions (e.g., for low-income individuals or those facing financial hardship). Employees can also appeal a garnishee, but the process varies by state and type of debt. IRS garnishments, for example, allow appeals through Collection Due Process (CDP) hearings.

State laws may provide additional protections, and some states may restrict or prohibit certain types of garnishees.

The Internal Revenue Service does not follow a strict percentage limit like other creditors. Instead, they use IRS Publication 1494, which sets exemption amounts based on filing status, number of dependents, and pay frequency.

The IRS garnishees all disposable income exceeding the exempt amount, which means garnishees may exceed 25% of disposable income in some cases.

Disposable income is gross income minus mandatory deductions, including:

• Federal and state income taxes
• Social Security and Medicare
• Mandatory retirement contributions

No, bonus payments, commissions, and other irregular earnings are generally fully subject to garnishee unless specifically exempt under IRS regulations.

Unlike regular wages, which have an exempt portion based on IRS Publication 1494, bonuses and commissions can be levied at 100% up to the total tax debt. This includes:

• Performance and holiday bonuses
• Sales commissions
• Incentive payments

If the IRS levy applies only to regular wages, bonuses may not be included unless specified or a separate levy is issued. Employers must send the garnisheed amount unless the taxpayer secures a release.

As of now, Texas, North Carolina, Pennsylvania, and South Carolina generally have restrictions or limitations on wage garnishee for credit card debt. However, this does not apply to IRS wage garnishees for unpaid federal taxes.

To check your wage garnishee balance, you can:

• Log into the IRS Online Account – Access your tax records and garnishee details online.
• Call the IRS at 1-800-829-1040 – Speak with an IRS representative for balance information.
• Review IRS notices – IRS correspondence will provide updates on garnishee status and remaining debt.
• Consult with your employer’s payroll department – Employers can confirm the amount deducted and any remaining balance.

Additionally, reviewing recent pay stubs and court documents (if applicable) can help track wage garnishee deductions.

Employers are required to respond to a wage garnishee order within a specific timeframe, which varies depending on federal and state regulations.

• Response Timeframe: Employers typically have 5 to 30 days from the date of receiving the order to respond, depending on state laws and the specifics of the garnishee.
• Withholding Start Date: In most cases, employers must begin withholding wages by the next pay period after receiving the order.
• Employer Responsibilities: Employers must carefully review the garnishee order, determine the correct withholding amount, and ensure timely submission to the appropriate authority.
• Penalties for Non-Compliance: Failure to comply with a garnishee order can result in penalties, fines, and, in some cases, the employer being held liable for the unpaid debt.

To ensure compliance, employers should promptly process the order and consult legal or payroll professionals if needed.

You can stop an IRS wage garnishee by:

• Paying the debt in full.
• Setting up an installment agreement with the IRS.
• Applying for exemptions if eligible
• Applying for an Offer in Compromise (settling for less than the full amount).
• Request a Collection Due Process (CDP) Hearing – can delay or prevent garnishee while your case is reviewed.
• Filing for Currently Not Collectible (CNC) status due to financial hardship.
• Requesting a garnishee release by proving undue hardship.
• Consulting an experienced tax lawyer.

Yes, taxpayers have the right to appeal an IRS wage garnishee through the following options:

• Collection Due Process (CDP) Hearing: You can request a CDP hearing within 30 days of receiving the Final Notice of Intent to Levy (Letter 1058 or LT11). Filing this appeal temporarily halts the garnishee while the IRS reviews the case.
• Collection Appeal Program (CAP): This allows you to dispute the garnishee at any stage of the process, including before or after wage seizure begins. Unlike a CDP hearing, CAP decisions are final.
• Request for Hardship Consideration: If the garnishee creates financial hardship, you can request Currently Not Collectible (CNC) status or an adjustment through an Offer in Compromise or an Installment Agreement.

To initiate an appeal, submit Form 12153 (Request for a CDP Hearing) or contact the IRS Office of Appeals within the required timeframe.

If you are facing an IRS wage garnishee, TaxLawyer.com provides professional legal assistance to help stop garnishees and to negotiate with the IRS.

We can assist with:

• Wage garnishee release requests
• IRS negotiations and appeals
• Tax settlement options
• Legal representation for IRS disputes.

Our tax attorneys serve clients in:

Contact us today to explore your options and protect your financial future.