What Are The Solutions Available If You Have An IRS Wage Levy / Wage Garnishment?

If you receive a Wage Levy from the IRS, the IRS is going to send a notice to your employer and your employer is obligated to withhold a portion of your paycheck and send it into the IRS in satisfaction of the debts that the IRS feel that you owe them.

The thing that you want to do if you don’t want to turn over a portion of your paycheck to the IRS is receive what is known as a Levy Release or a Release of Levy.

To receive a Release of Levy, there are a few acceptable solutions that are available to you.

You can’t just call up the IRS and say, “I don’t want a Wage Levy, please release the levy.”

The first thing is that you have to demonstrate to the IRS is that it’s a financial hardship. Doing so, you must document your monthly income versus, what the IRS call, allowable monthly expenses based upon IRS standards.

If your monthly income equals your monthly allowable expenses, then you have no ability to pay. By invoking the Wage Levy that would be considered a financial hardship and that is a technical term.

Accordingly, in that situation you can probably get yourself set up as Currently Not Collectible.

The other solution that you could put in place would be an Installment Agreement. If you enter into an installment Agreement to pay the amount that you owe to the IRS over time, that’s going to satisfy them and the IRS will not do any more enforced collection activity.

As a matter of fact, the IRS will release the levy that’s on your wages and that’s what you’re trying to do.

The third thing is that you can do is to file an Offer in Compromise.

If the IRS accept an Offer in Compromise then the IRS will release the levy on your paycheck. The only problem with filing an offer in compromise is that it typically takes 6 to 9 months for the IRS to work your case.

Assuming that you did it today, it’s still going to take 6 to 9 months. So in a situation where someone qualifies for an Offer in Compromise, I typically try to get that person set up as Currently Not Collectible so we can get the levy released from their wages today.

We don’t have to wait 6 to 9 months because that can be a lot of money withheld from their paycheck.