A wage garnishment is a legal seizure by the IRS of a taxpayer’s wages to satisfy a tax debt. A wage levy is continuous unless the levy is released or the tax debt is paid in full.
By the time, the IRS issues a wage garnishment, the taxpayer would have received several notices from the IRS.
The IRS will issue a levy only after these three requirements are met:
- An assessment of the tax was made and the IRS issued a Notice and Demand for Payment;
- The taxpayer neglected or refused to pay the tax; and
- The IRS issued a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy. Note that if the IRS levied your state tax refund, the taxpayer will receive a Notice of Levy on Your State Tax Refund, Notice of Your Right to Hearing after the levy was issued.
Employers generally have at least one full pay period after receiving a Form 668-W, Notice of Levy on Wages, Salary and Other Income before they are required to send any funds from their employee’s wages. The amount of wages that attach to the levy is calculated using several factors:
- Filing Status: Single, Head of Household, Married Filing Joint, Married Filing Separate
- How often a taxpayer is paid: Daily, weekly, biweekly, semimonthly, monthly
- The number of exemptions claimed by the taxpayer
IRS Wage Garnishment Calculator
For example, a single taxpayer who is paid biweekly and claims two exemptions (including one for the taxpayer) has $550.00 exempt from levy. This means that the IRS will take all the funds above $550.00, leaving a taxpayer $550.00 to pay for their necessary living expenses. Since the wage levy is continuous, unless it is released or the balance due has been paid in full, a taxpayer will receive $550.00 every 2 weeks to pay for their expenses.
