IRS Levies vs. Garnishments: Taxpayers Must Know
Facing tax debt can be stressful, especially when the IRS takes collection actions like levies or garnishments. Understanding the difference between these enforcement tools is crucial for protecting your income, assets, and financial stability. This guide explains how each works, your rights, and strategies to respond effectively.
What is an IRS Levy?
An IRS levy is the legal seizure of your property to satisfy a tax debt. Levies can target:
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Bank accounts
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Retirement accounts
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Vehicles
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Real estate
Levies are usually a last resort after multiple notices and attempts to collect. Once a levy is issued, the IRS can take property or funds directly, leaving taxpayers little control if they don’t act quickly.
Key points:
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You must receive a Final Notice of Intent to Levy at least 30 days before the action.
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You can request a Collection Due Process (CDP) hearing to challenge the levy.
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Exempt property may include basic necessities like clothing, furniture, and limited income sources.
Learn more at the IRS Levies page.
What is a Wage Garnishment?
A wage garnishment, also called a wage levy, allows the IRS to take money directly from your paycheck. Employers are legally required to withhold the specified amount and send it to the IRS.
Key points:
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Garnishments are limited by federal law to protect a portion of your income.
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You must receive notice before the garnishment begins.
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You may request adjustments based on financial hardship.
Learn more at the IRS Wage Levy page.
Differences Between Levies and Garnishments
| Feature | IRS Levy | Wage Garnishment |
|---|---|---|
| Type of Property Seized | Bank accounts, real estate, vehicles | Portion of paycheck only |
| Notice Required | 30-day Final Notice | Notice before withholding starts |
| Employer Involvement | Not required | Employer must withhold |
| Flexibility for Taxpayer | Limited | Some adjustments possible |
How to Stop or Prevent Levies and Garnishments
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Pay Your Tax Debt – Full payment immediately stops collection actions.
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Set Up an Installment Agreement – Arrange monthly payments with the IRS.
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Offer in Compromise (OIC) – Settle for less than owed if financially eligible.
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Currently Not Collectible (CNC) Status – Temporarily pause collection due to hardship.
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Appeal or Request a CDP Hearing – Challenge levies if you have valid reasons.
For more details on payment options, visit IRS Payment Plans.
Bottom Line
Understanding the difference between levies and wage garnishments empowers taxpayers to take action before their assets or income are seized. Early communication with the IRS, setting up payment plans, or consulting a tax professional can prevent serious financial consequences.
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