A wage levy is a collection action taken by the IRS to garnish a portion of a taxpayer’s wages to satisfy unpaid tax debt. When the IRS issues a wage levy, it sends a Notice of Levy to the taxpayer’s employer, requiring them to withhold a percentage of the taxpayer’s paycheck and send it directly to the IRS.
Wage levies can be imposed after the IRS has sent multiple notices, including a Final Notice of Intent to Levy (IRS Letter 1058) and the taxpayer has failed to resolve their tax debt. The levy continues until the full amount of the tax debt, including penalties and interest, is paid or until the taxpayer takes action to stop the levy by:
- Paying the full tax debt.
- Entering into an Installment Agreement or Offer in Compromise.
- Requesting a Collection Due Process (CDP) hearing.
A wage levy can cause significant financial hardship, as it reduces the taxpayer’s take-home pay. It is important to act quickly to resolve the underlying tax debt and request a levy release if the taxpayer is facing financial difficulties.