Guide to IRS Garnishments | Community Tax

Garnishment is when the IRS takes a portion of your income—like wages, retirement payments, or contractor income—to pay off a tax debt.

Wage garnishment from the IRS doesn’t take a flat percentage like most creditors. Instead, it calculates how much of each pay period you’re allowed to keep based on your filing status and number of dependents. Though the more frequent your pay is the smaller protected amount per check, these differences equal the similar totals over time.

A tax levy, on the other hand, is broader. It allows the IRS to seize assets directly, such as money in your bank account or your tax refund. Both are used to collect money from a taxpayer who has not fulfilled their tax debt, but garnishments are typically ongoing—meaning, it can affect your finances over time.

IRS garnishment doesn’t happen overnight. It’s a structured process the IRS follows to collect unpaid taxes after multiple attempts to resolve the tax debt.

The IRS first sends a bill for unpaid taxes. This outlines what you owe and requests payment. At this stage, no garnishment has started yet.

If the balance remains unpaid, the IRS issues a Final Notice of Intent to Levy and Notice of Your Right to a Hearing.

You are given at least 30 days to respond, so this is your opportunity to contact a tax attorney to appeal or set up a payment plan.

If you don’t respond within 30 days, the IRS can move forward with a wage garnishment order, a bank levy, or other income levies. Unlike most creditors, the IRS does not need a court order to begin this process.

Wage garnishments are continuous and apply to every paycheck. Though bank levies are typically one-time seizures, they can be repeated. Garnishment will continue until the tax debt is paid or another resolution is reached.

If you’ve had overdue taxes for a significant amount of time, your employer will receive a garnishment order instructing them to apply a wage garnishment. Though wage garnishment is one of the more well-known forms of IRS garnishment approaches, this tax isn’t limited to wages. The IRS can extend its reach to place garnishments on retirement income, bank accounts, and even tax refunds.

Fortunately, there are limits, exemptions, and ways to stop it. Community Tax is here to help you make sense of what the IRS can—and can’t—collect.

Certain essentials and protected income are typically exempt or partially protected:

Portions of income needed for basic living expenses
Basic household goods and personal items
Court-ordered child support payments
Some public assistance benefits
Books, professional tradestools, and other professional materials needed for work

Wage garnishment, when it comes to protected income, can vary depending on the taxpayer’s financial situation, as well as the severity of the outstanding tax liability.

Errors do happen. If you want to dispute a garnishment, you can contact the IRS within 30 days of the garnishment notice if you believe the debt is already paid or incorrect for another reason. You typically have a limited window to request a hearing or file a dispute, so timing matters. If you think a garnishment has been applied to your assets in error, reach out to a Community Tax professional immediately, so we can help you resolve the situation and avoid future penalties.

When it comes to paying off your tax debt, acting early makes a big difference. As soon as you receive a notice from the IRS that you have an outstanding balance, it’s crucial for you to respond immediately. If you can’t pay in full to resolve the issue quickly, you still have other options. You can:

Our tax attorneys are here to help negotiate on your behalf. Let us help you resolve your garnishment in a timely and efficient manner.

Garnishment can be a complicated topic. Work with a Community Tax attorney and find the best course of action for your financial situation. We’re here to guide you through the most stressful and confusing parts of paying taxes and help you build the best strategy to reach freedom from tax debt.