Tax Resolution: When Does the IRS Garnish?

Receiving a letter from the IRS is often a source of stress and uncertainty, especially when you see the words “Intent to Levy” on the page. For many people with unpaid taxes, the fear of a garnishment looms large, but they’re unsure of when the IRS is likely to start the garnishment process.

This guide is designed to give you a detailed understanding of wage garnishment—what triggers it, the steps the IRS takes, and how you can prevent it. You’ll learn about the notices the IRS sends, the laws governing garnishment, and the proactive steps you can take to resolve your tax issues.

Whether you’re in the early stages of receiving IRS notices or on the verge of garnishment, we are here to help. At 20/20 Tax Resolution, our team of experienced enrolled agents and tax professionals has helped countless taxpayers stop garnishments, negotiate with the IRS, and regain financial stability. Let’s walk through the process so you can take control of your situation and avoid the stress of having your wages garnished.

What Is Wage Garnishment?

Garnishment is a legal process in which a creditor—such as the IRS—takes a portion of an individual’s paycheck directly from their employer to repay a debt. Unlike private creditors, who must obtain a court judgment to garnish wages, the IRS has unique authority to garnish wages without involving the courts. This power comes from federal tax laws, which grant the IRS broad rights to collect unpaid taxes.

When the IRS garnishes wages, your employer is legally required to withhold a specified portion of your paycheck and send it directly to the IRS. This amount is applied to your outstanding tax debt, including the original balance, accrued interest, and penalties. Wage garnishment continues until your debt is fully paid or another resolution is reached, such as setting up a payment plan or qualifying for a hardship determination.

How Much Can the IRS Garnish?

But how much of your paycheck can the IRS garnish? That’s a common question that people at risk of wage garnishment ask. The IRS calculates how much they can garnish based on your filing status, income, and the number of dependents you claim. Those elements determine how much money the agency must let you keep out of your paycheck, and then, they can take the rest.

In fact, the garnishment laws are so in favor of the IRS that if one of your jobs covers the exempt amount, you may lose 100% of your wages to garnishment at your second job. Or if you get an unexpected bonus, that can also be completely seized by the IRS, provided your regular wages cover the exempt amount.

Why Does the IRS Garnish Wages?

The IRS garnishes wages to collect unpaid taxes when other collection efforts fail. Wage garnishment allows the IRS to legally take a portion of your paycheck directly from your employer. This ensures the agency collects the money owed without depending on voluntary payments.

Like other tax levies, garnishment is a last-resort measure meant to resolve debts that have been outstanding for an extended period. However, this action is avoidable if you address your tax issues promptly. The sooner you respond, the more options you have to resolve your debt without severe consequences like garnishment.

When Does the IRS Garnish Wages?

The IRS issues garnishments only after sending a series of warnings and offering several opportunities to resolve your debt. There is no set timeline between the day your taxes are due, and the day the IRS starts the garnishment process. However, once the letters start coming, you can expect to see them every six to eight weeks, and the risk of garnishment gets stronger with every notice.

The process often begins with a CP14 Notice, which informs you of a tax balance due. If you don’t respond or pay the amount owed, the IRS escalates with follow-up notices like the CP501, CP503, and finally the CP504 Notice, which states the IRS’s intent to levy. Although the CP504 states that the IRS may garnish your wages, at this point, they still must send you another notice before starting the garnishment.

The final step before garnishment is the Final Notice of Intent to Levy and a Notice of Your Right to a Hearing. There are a few different notices that fall into this category including the LT-1058 and LT-11. This is your last opportunity to take action before garnishment begins. You have 30 days from the date of this notice to contact the IRS, request a hearing, or set up a payment plan.

If you fail to act within this timeframe, the IRS can start garnishing your wages. However, the process can move faster if a revenue officer is involved. Revenue officers are IRS agents assigned to high-priority cases, and they have the authority to expedite the garnishment process. For example, they may bypass some of the standard notices if they determine the debt is at risk.

Can the IRS Garnish Without Notice?

In most cases, the IRS is required to provide notice before garnishing wages. However, there are exceptions where the IRS can bypass the standard notification process. This typically happens in urgent situations where the IRS believes the debt is at risk of becoming uncollectible.

For example, if the IRS suspects you’re hiding assets, transferring property to avoid collection, or planning to leave the country, they may skip the 30-day waiting period. Additionally, if you’ve signed a waiver of your right to notice—intentionally or unintentionally—the IRS can proceed without the usual notifications.

While these situations are rare, they highlight the importance of addressing IRS communications promptly. Ignoring notices or failing to understand your rights can lead to unexpected garnishment without the usual warnings. If you think you are at risk of wage garnishment and need a customized strategy for tax resolution, our team at 20/20 Tax Resolution can help.

How to Prevent the IRS From Garnishing Your Wages

Preventing wage garnishment requires prompt action and communication with the IRS. Here are some strategies to stop garnishment before it begins:

• Pay your balance in full: If possible, paying the amount owed in full is the quickest way to avoid garnishment.
• Set up a payment plan: Installment agreements allow you to pay your debt over time. Once you’re on a plan, the IRS halts garnishment efforts.
• Request an Offer in Compromise (OIC): If you can’t afford to pay your full debt, you may qualify for an offer, which lets you settle for less than you owe.
• File for Currently Not Collectible (CNC) status: If garnishment would cause financial hardship, you can request CNC status. This pauses collection actions temporarily.
• Seek professional help: An enrolled agent, CPA, or tax attorney can negotiate on your behalf, request hearings, or explore other solutions.

Taking these steps not only prevents garnishment but also helps you stay in control of your financial situation.

Common Questions About IRS Wage Garnishment

Wage garnishment is a complicated process that often leaves many taxpayers with questions about how it works and what to expect. Below are answers to some of the most common questions about IRS wage garnishment to help you understand the serious nature of your situation.

Can the IRS garnish wages without warning?

No, in most cases, the IRS cannot garnish your hard-earned wages without giving you notice. Federal law requires the IRS to send a Final Notice of Intent to Levy and a Notice of Your Right to a Hearing at least 30 days before garnishment begins. This gives you an opportunity to request a hearing or negotiate a payment arrangement.

However, there are exceptions where the IRS can garnish wages without notice (e.g., the agency believes collection is at immediate risk because you’re hiding assets or planning to leave the country).

What happens if you ignore IRS notices?

Ignoring IRS notices only worsens the situation. The IRS will continue escalating collection actions, including wage garnishment, bank levies, and liens against your property. Responding promptly to notices is the best way to avoid garnishment and resolve your debt.

How do I know if the IRS garnishes my wages?

You’ll know if the IRS is garnishing your wages because they are required to notify you. The Final Notice of Intent to Levy serves as your official warning. If you don’t respond, your employer will receive a wage levy notice, instructing them to withhold a portion of your paycheck. You’ll also receive a copy of this levy notice, and a form to fill out about your exemptions.

If you’re unsure whether garnishment has started, check with your employer or review your paycheck stubs. Any deductions labeled as “IRS levy” or “tax garnishment” confirm that garnishment is underway.

How long does it take for the IRS to garnish wages?

Generally, the IRS will not garnish your wages until you are several months or potentially a year or more behind on your tax obligations.

After sending the Final Notice of Intent to Levy, the IRS generally waits 30 days before beginning garnishment. This 30-day window allows you time to dispute the levy, request a hearing, or set up a payment plan.

If a revenue officer is assigned to your case, the process can move faster, as they have more authority to expedite garnishment actions. In these cases, the timeline for garnishment may be shorter than 30 days.

How much of your paycheck can the IRS garnish?

The IRS calculates the garnishment amount based on your filing status, income, and the number of dependents you claim. Unlike other creditors, the IRS is not limited by state garnishment laws and can take a significant portion of your paycheck.

Using IRS Publication 1494, the agency determines how much of your income is exempt from garnishment, leaving you with just enough for basic living expenses. For example, as of 2024, someone who has two dependents and files as head of household has an exempt amount of $613.45 a week and the rest can be garnished.

What types of income can the IRS garnish?

The IRS can garnish more than just wages. Other income sources subject to garnishment include:

• Social Security benefits
• Pension payments
• Independent contractor or freelance earnings
• Rental income

Certain benefits, such as disability payments, worker’s compensation, and unemployment benefits, are generally protected from garnishment.

How can the IRS garnish a business owner?

If you own a business, the IRS cannot contact your employer and instruct them to garnish your wages. However, in these situations, the IRS may use other actions to involuntarily collect the tax debt. The agency may seize your business assets including cash in the register, inventory, equipment, and supplies-however, if you can make a compelling argument that you need those supplies to earn money to get back into compliance, you may be able to avoid those seizures.

The IRS can also intercept payments due to you from other entities. For example, if you use a payment processor, the IRS can intercept the payments and have them routed to the IRS. The IRS can also take your accounts receivables and have anyone who owes money to your business send it to the IRS.

Can an individual face garnishment for business tax debts?

The IRS can hold business owners liable for certain business tax debts, even in cases where the tax debt was incurred by the business. In particular, the IRS and potentially your state can “pierce the corporate veil” for most trust fund taxes, which refers to taxes collected from other people by the business to be remitted to the government. For example, taxes withheld from an employees’ paychek and/or state sales taxes are trust fund taxes. If you are personally liable for an unpaid business tax, you may face garnishment.

Individuals who make decisions about payroll payments can also be held personally liable for the Trust Fund Recovery Penalty. For example, an accountant who sets the business’s budget and pays its checks may be held liable, even if they don’t have an ownership stake in the company. By extension, you may also face garnishment for this type of tax debt.

Does the IRS garnish wages for all tax debts?

Not all tax debts lead to garnishment. The IRS typically reserves garnishment for debts that remain unpaid despite multiple notices. Smaller balances may result in less severe collection actions, such as liens or payment demands, while larger, unresolved debts are more likely to lead to garnishment.

The IRS can use garnishments to collect unpaid individual income tax, payroll taxes, and excise taxes. State revenue agencies can also implement garnishments to collect many different individual and/or business taxes.

When does wage garnishment end?

Wage garnishment ends when:

• Your tax debt, including penalties and interest, is fully paid.
• You set up an alternative resolution, such as an installment agreement or Offer in Compromise, and the terms of the agreement say the IRS must stop the garnishment.
• The IRS determines that garnishment is causing undue financial hardship and grants Currently Not Collectible (CNC) status.
• The statute of limitations on the tax debt expires, which is typically 10 years from the date the tax was assessed, according to the IRS’s website.

Can you stop garnishment after it starts?

Yes, it is possible to stop a wage garnishment after it begins, but it’s not necessarily easy, especially without legal help. Consider speaking with an enrolled agent or tax professional immediately to discuss alternative arrangements, such as a payment plan, Offer in Compromise, or hardship determination. Your attorney will help you negotiate with the IRS and potentially stop garnishment while exploring other solutions.

What should you do if you can’t afford garnishment?

If wage garnishment leaves you unable to cover basic expenses, you can request a hardship determination. This involves proving that the garnishment creates significant financial strain, after which the IRS may pause collection actions by placing your account in Currently Not Collectible status.

You Can Stop Wage Garnishment Now

The IRS might seem like an unstoppable machine, but you have rights and options. Whether you’re trying to stop garnishment before it starts or are already experiencing it, you need to act now. Ignoring IRS notices only accelerates the process, but with the right guidance, you can resolve your tax debt and avoid the severe consequences of wage garnishment.

Don’t wait until it’s too late to act. The tax professionals at 20/20 Tax Resolution are dedicated to helping taxpayers like you fight garnishment, negotiate with the IRS, and explore debt resolution options. We’ll work with you to develop a plan tailored to your unique situation, giving you the peace of mind and financial stability you deserve. Contact us today to schedule a free consultation.