What do I do when I receive notice of a wage levy from my employer?

As we previously covered in another FAQ, the wage levy is one of the most powerful collection tools in the IRS' arsenal.  Unlike a bank levy, which is a one time hit on whatever is in your account, the wage levy stays in place until your debt is satisfied or you quit.

For many folks the wage levy presents a vicious cycle.  You work as hard as you did before the levy hit, but now you are only taking home a fraction of what you worked for.  Many taxpayers up and quit their jobs, only to find that the IRS has caught up with them again when a new employer files a W-2 on them.

You must take immediate action.  If you have unfiled returns, you must get them on file, or the IRS will not consider any alternative to the powerful wage levy.  Regardless of whether or not you are completely filed up, you (or a local licensed tax professional) need to call the number for the IRS listed on the levy notice.  Note, tax professionals have a priority number for calls such as these, since time is almost always of the essence.  You need to have a plan of action in place when you call them.

For instance, if you have unfiled returns, you need to give them a date when you can have the returns filed.  You can also request hardship status or suggest an installment agreement, which are covered in more depth on my site.  You may also advise them that you are filing an Offer in Compromise.  If the IRS representative deems your requests to be in good faith, the wage levy will stop, pending the outcome of the collection alternative you seek.

You will also be asked to fill out a 433-A (if a Revenue Officer is involved) or a 433-F, if you are dealing with the IRS' Automated Collection Service.  This document determines your eligibility for nearly every collection alternative program the IRS offers.  I don't recommend that any taxpayer draft this document alone.  There are many subtle nuances to these forms, and you should hire a qualified tax professional to navigate you through this process.