How IRS Wage Garnishment Works
The IRS calls it a wage levy, not a garnishment. The difference matters. A regular creditor garnishment in most states is limited to 25 percent of your disposable income. The IRS is not a regular creditor. They can take everything above a small exempt amount based on your filing status and number of dependents.
For a single person with no dependents, the IRS exempt amount is roughly $1,100 per month. Everything above that goes to the IRS. If you make $5,000 a month, the IRS takes about $3,900. Try paying your rent with $1,100.
The Process Before Garnishment
The IRS does not garnish your wages overnight. There is a process. First, they assess the tax. Then they send you a Notice of Balance Due. Then a Notice of Intent to Levy. Then a Final Notice of Intent to Levy and Notice of Your Right to a Hearing. You have 30 days after that final notice to request a Collection Due Process hearing.
Most people ignore these notices. That is the single biggest mistake I see. By the time they call me, the levy is already in place and their next paycheck is about to be gutted.
How I Stop It
There are several ways to stop an IRS wage levy. The fastest is to call the revenue officer or the Automated Collection System and negotiate a release. This usually requires proposing an alternative collection method like an installment agreement or demonstrating that the levy is creating an economic hardship.
If the IRS will not release the levy voluntarily, we can file a Collection Due Process appeal. We can also file a Taxpayer Advocate Service case if there is an imminent financial hardship. In extreme cases, we can seek an injunction in federal court, though that is rarely necessary.
What You Need to Do Right Now
If you are facing an IRS wage garnishment, do three things immediately. First, do not quit your job thinking that will solve the problem. The levy follows you to your next employer. Second, gather your last three months of bank statements and a list of your monthly living expenses. Third, call a tax attorney. Time is not on your side here.