Can IRS garnish wages without warning?

The IRS has the legal authority to garnish wages and seize assets in order to collect back taxes that are owed. However, there are specific procedures the IRS must follow before garnishing wages, including providing warnings and notice to the taxpayer. The IRS cannot simply begin garnishing wages out of the blue without due process.

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IRS Wage Garnishment Rules

According to the IRS, there are two main types of levies (garnishments) the IRS can impose:

Federal tax levy – This allows the IRS to garnish wages and seize property to collect back taxes.
State levy – The IRS can collect past-due federal taxes through a state levy program, which allows collection of state tax refunds.

In order for the IRS to garnish wages or levy a bank account, the agency must adhere to these rules:

The taxpayer must have an assessed tax liability – This means the IRS has officially recorded the amount owed in its system after auditing the taxpayer or the taxpayer failing to pay after receiving notices.
Notice and demand for payment of the tax liability must be sent to the taxpayer – This provides the taxpayer a formal notice that the amount owed is due immediately.
If payment is not made after the notice and demand, the IRS will send a final notice of intent to levy along with a notice of the taxpayer’s right to hearing before levy is made.

If a taxpayer hearing is not requested within 30 days, the IRS can proceed with wage garnishment without delay.

In most cases, the IRS is required to provide taxpayers with multiple notices before garnishing wages or seizing assets. However, there are exceptions when the IRS does not have to provide advanced warning.

When Garnishment Can Occur Without Warning

There are certain situations in which the IRS is not obligated to provide notice before garnishing wages, including:

Jeopardy assessments – If the IRS claims the taxpayer intends to leave the country, remove property from the U.S., or conceal assets, it can immediately assess tax without sending deficiency notices.
Terminated assessments – If the collection period for assessing tax is about to expire, the IRS can impose garnishment to quickly collect tax owed.
Dischargeable taxes – If the taxpayer has discharged taxes in bankruptcy, but did not file a return, the IRS can immediately collect by garnishment without notice.

In these limited situations, the IRS does not have to go through the typical notification process before levying wages and bank accounts. However, the taxpayer will be notified promptly after the fact.

When Garnishment Is Not Allowed

There are also certain scenarios in which the IRS is prohibited or limited in garnishing wages, even if taxes are owed:

The taxpayer has been granted relief under an Offer in Compromise or Installment Agreement.

The back taxes owed are dischargeable in bankruptcy.
The taxpayer qualifies for hardship relief under IRS rules.
Only a maximum portion (up to 15%) of a taxpayer’s disposable earnings can be garnished weekly.

Certain income sources are protected from garnishment, such as Social Security benefits.

How the IRS Notifies Taxpayers of Intent to Levy

Except in the special circumstances noted above, the IRS must follow defined procedures and provide a series of notices before garnishing wages. These notices inform the taxpayer of their rights and give them opportunities to resolve the tax bill before collection action is taken.

The initial notice is called a Notice and Demand for Payment. This provides the taxpayer with a bill for the total amount due (must be $10 or more). This notice begins the collections period and requires payment within 10 days. After 30 days from the notice date, penalties and interest begin accruing.

If the taxpayer does not pay the amount due after receiving a Notice and Demand, the IRS will send a Final Notice of Intent to Levy and Notice of Your Right to a Hearing. This must be mailed or delivered at least 30 days before the intended levy action. This notice informs the taxpayer they have a right to appeal the levy by requesting a Collection Due Process hearing within 30 days.

Taxpayers have the right to request a hearing with the IRS Office of Appeals within the 30 day timeframe. This hearing allows taxpayers to explain why they believe the levy is inappropriate, provide alternatives to collection, or request relief. The levy actions are usually suspended during a pending hearing.

If the taxpayer does not pay the amount owed or exercise appeal rights, the IRS can proceed with the wage garnishment after 30 days from the date the final notice was sent.

WhenTaxpayers Receive No Prior Notice of Levy

In most cases, taxpayers receive multiple notices from the IRS before their wages or bank accounts are garnished. However, as noted previously, there are some exceptions when the agency can proceed immediately with collection actions without sending advance notices.

If a taxpayer’s paycheck or bank account suddenly has funds seized without prior warning from the IRS, here are some possible reasons:

The taxpayer owed past-due taxes that were discharged in bankruptcy but did not file a tax return for those years. The IRS is allowed to immediately collect without notification.

The collection statute expiration date was about to expire, allowing the IRS to make a terminated assessment and immediately garnish funds.
The IRS believed the taxpayer intended to quickly leave the country or remove assets from the United States and made a jeopardy assessment.
There was an administrative error and the IRS levied without following standard procedures.

A taxpayer can contact the IRS if their wages or bank accounts are suddenly garnished without receiving any notices. The IRS should investigate the reason why proper procedures were not followed. Taxpayers can also consult with a tax attorney or CPA, who can assist with negotiating with the IRS to remove the improper levy.

How to Avoid IRS Wage Garnishments

Getting hit with an IRS wage garnishment can be stressful and financially devastating. Here are some tips to avoid having your paycheck seized by the IRS:

File all tax returns – Taxpayers who have not filed returns for several years often suddenly find themselves facing immediate IRS collection action. Avoid this by making sure to file returns annually, even if you cannot pay the entire amount owed.

Pay as much as you can – If you receive a tax bill from the IRS but cannot afford to pay in full, pay as much as possible by the deadline. This demonstrates good faith and may delay further collection actions.
Request an extension – If you cannot pay the full amount owed by the deadline, request an extension of time to pay. This will allow you up to 120 days without late payment penalties.
Enter into an IRS payment plan – Set up an installment agreement or payment plan with the IRS to pay off your tax liability over time. As long as you stick to the plan, wage garnishments will be avoided.

Apply for an Offer in Compromise – Submit an application for an Offer in Compromise to settle your tax debt for less than the full amount owed. If approved, the IRS will not garnish as long as you comply with the terms.

Garnishing wages is always a last resort for the IRS after exhausting other collection attempts. Taxpayers have opportunities during the process to proactively work with the IRS and pay off tax bills before facing seizure of their paychecks or bank funds.

The IRS Levy and Release Process

When the IRS issues a tax levy, it authorizes collection actions against personal assets and income sources. This allows the IRS to garnish wages and seize funds from bank accounts.

Here is an overview of the typical IRS levy and release process:

Final Notice of Intent to Levy is sent after taxpayer ignores previous notices and does not pay amount owed.
Taxpayer has 30 days from the date of the final notice to pay in full, enter into a payment agreement, or request a Collection Due Process hearing to appeal the proposed levy.

If taxpayer takes no action, the IRS can proceed with the actual levy after the 30 day period passes.
IRS Form 668-A is sent to third parties (employers, banks, etc) notifying them to surrender taxpayer assets and income to the IRS.
When the taxpayer pays off the tax liability, enters into an IRS installment agreement, or IRS determines the levy should be released, Form 668-D Release of Levy is issued.

The third party is notified to stop surrendering taxpayer income and assets to the IRS once Form 668-D is received.

A levy generally is effective until the tax liability is paid in full or the IRS issues a release. However, continuing levies against wages and recurring payments are only valid for up to 6 months but can be renewed if the tax debt remains.

Reasons the IRS May Release a Levy

There are various reasons why the IRS may decide to release a levy and stop seizing income and assets from a taxpayer. Some common reasons for releasing a levy include:

The taxpayer pays the tax debt in full
The taxpayer enters into an Installment Agreement to pay the liability over time
An Offer in Compromise is submitted and is being considered by the IRS

The taxpayer establishes paying the levy would create an economic hardship
The Fair Tax Collection Practices violation is determined to have occurred in the collection process
The original amount owed is found to be wrong or reduced

A taxpayer can request their levy be released for reasons such as hardship or improper procedures by the IRS. Taxpayers should consult a tax professional for assistance in getting an IRS levy removed.

Appealing an IRS Levy

Taxpayers have the right to appeal an IRS decision to levy wages and seize property. This is done by requesting a Collection Due Process hearing with IRS Appeals within 30 days of receiving a final notice of intent to levy.

Reasons a taxpayer may request a hearing and appeal a levy include:

Disputing the amount being levied
Requesting placement in Currently Not Collectible status
Asking for alternative collection methods be considered

Negotiating a collection installment agreement
Providing proof of financial hardship preventing payment
Presenting evidence the levy threatens the taxpayer’s livelihood

At the appeals hearing, the taxpayer can present documentation, records, and testimony to support their reasons for appealing the tax levy. The Appeals Officer will determine if the proposed levy action is appropriate and make a decision to sustain, withdraw, or modify the levy.

If a taxpayer misses the 30 day deadline to request a hearing, one can still be requested later to amend or terminate an existing levy. The IRS Independent Office of Appeals provides taxpayers with an opportunity for a fair and impartial review of collection actions.

Recovering Levied Funds from the IRS

When assets or wages are seized by IRS levy action, the funds do not necessarily disappear forever. Taxpayers have options for recovering levied money from the IRS under certain conditions. Some key ways include:

Requesting return of levied funds – If it is found the levy was wrongful, improperly served, or illegally collected, taxpayers can request the IRS return the seized funds.
Credit toward existing balance – If an IRS levy to collect a certain debt seizes funds needed to pay a different tax debt, the amount can credited toward the other obligation.
Wrongful levy refunds – Taxpayers have nine months from the date of levy to file a claim for a refund of money wrongfully levied.

Litigating for a refund – If the IRS denies a refund claim, the taxpayer can file a refund lawsuit in federal court within 2 years.

When IRS collection actions are found to be unduly harsh, improperly conducted, or create significant hardship, taxpayers have remedies to recover levied money. However, the taxpayer bears the burden of proof when disputing an IRS levy.

Navigating IRS Levy Situations

Dealing with IRS levies against property, bank accounts, or wages can be complex. Taxpayers facing IRS collection enforcement actions are encouraged to:

Carefully review all notices from the IRS and be aware of response deadlines.
Pay as much of the tax bill as early as possible to delay levy action.
Consider requesting an Offer in Compromise settlement or Installment Agreement if unable to pay in full.

Hold an appeals hearing to dispute the proposed levy before it occurs.
Seek professional assistance from a tax relief attorney, CPA, or enrolled agent.
Be prepared to document financial hardship if requesting release of levy.

While frightening, IRS levies do not necessarily mean taxpayers will lose their income source or assets. By being proactive and understanding their rights, taxpayers can best navigate IRS collection actions.

Levy Type	Description
Wage levy	Ongoing seizure of a portion of the taxpayer’s earnings from employment
Bank levy	One-time seizure of all funds in a taxpayer’s bank account
Federal payment levy	Seizure of government payments such as tax refunds or Social Security
Continuous levy	Ongoing levy against specified payments like wages, commissions, or retirement income

This table summarizes the most common types of IRS levies used to seize taxpayer assets and income for unpaid taxes.

Conclusion

In summary, the IRS is not authorized to garnish wages or seize taxpayer assets without providing advance notice and an opportunity for the taxpayer to respond. However, there are limited exceptions when the IRS can immediately levy without warning. Taxpayers facing IRS collection actions should carefully review all notices, be aware of their appeal rights, and seek professional help if needed. With the proper response, many proposed IRS levies can be delayed, reduced, or even withdrawn.