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Wage Garnishment

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If you get a levy against one of your employees, you must turn over to the IRS any property you have that belongs to the person levied against. A levy attaches to property or rights to property you hold that belongs to the person levied against. In general, the IRS uses a levy form that contains the most appropriate instructions about how to comply with the levy.

The IRS will generally issue levy on an individual's wages, salary (including fees, bonuses, commissions) or other income such as taxpayer's benefit or retirement income.

Employers generally have at least one full pay period after receiving a levy Form 668 series, Notice of Levy on Wages, Salary and Other Income before they are required to send any funds from their employee’s wages to the IRS. Employers should encourage employees that have a levy placed on their wages to contact the IRS as soon as possible to discuss a release of levy and resolution of their tax liability.

Wage levies are continuous

The Internal Revenue Code allows for continuous levies with respect to wages, salaries and employee benefits or retirement income. This means that a levy on wages and salaries continuously attaches until it is released.

A continuous wage levy may last for some time. When all the tax shown on the levy is paid in full, the IRS will issue a Form 668-D, Release of Levy/Release of Property from Levy. The IRS may also release a levy if the taxpayer makes other arrangements to pay their tax debt.

Amount owed

Levy forms include a "Total Amount Due." This amount is calculated through the date shown below the total amount due. Interest and any applicable penalties will continue to accrue after the date shown. To get an updated payoff figure, the person who owes the tax liability will need to contact the IRS.

Wage levy exempt amount

In the case of a levy on wages, the employer will pay the employee any amounts exempt from levy. The IRS calculates the exempt amount based on the standard deduction and an “amount determined” calculated in part based on the number of dependents you are allowed for the year the levy is served.

A levy includes a Statement of Dependents and Filing Status. The employer gives this statement to the employee to complete and return within three days. If the employer does not receive the statement in three days, the exempt amount is figured as if the person is married filing separately with no dependents. The IRS will notify the employer when the taxpayer is not entitled to levy exemptions.

If a wage levy continues from one calendar year to the next, the employee may submit a new Statement of Dependents and Filing Status and ask their employer to re-compute the exempt amount

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