This guide provides actionable strategies to stop wage garnishments and bank levies, helping you regain control of your finances and move toward resolving your tax issues. Whether you’re already experiencing a levy or garnishment or are concerned about potential collection actions, understanding your rights and options is the first step toward finding relief.

What Are Wage Garnishments and Bank Levies?

Wage Garnishments Defined

A wage garnishment occurs when the IRS directs your employer to withhold a portion of your paycheck and send it directly to the government to satisfy your tax debt. Unlike most creditors who need a court order to garnish wages, the IRS has the authority to garnish wages without going to court first.

According to the IRS, a wage levy continues until:

• You make arrangements to pay your tax debt
• The amount you owe is paid in full
• The collection period expires

The IRS does allow for a portion of your wages to be exempt from garnishment based on your filing status and number of dependents. This exempt amount is calculated using the standard deduction and is meant to ensure you can still meet basic living expenses while paying your tax debt. However, the exempt amount is often insufficient to maintain your normal standard of living, creating significant financial strain for many taxpayers.

Wage garnishments for Joint Tax Debt

When you owe tax debt on a joint return, the IRS can go after either or both spouses to collect the money.  The Internal Revenue Manual states that it is IRS policy to generally levy only the wages of the higher-earning spouse unless the taxpayer has committed flagrant misconduct.

Flagrant misconduct can involve tax fraud, cases where the Trust Fund Recovery Penalty has been assessed, or a pattern of uncooperative behavior to delay collection. In these cases, the IRS can garnish the wages of both spouses.

If you are still married, only one spouse can claim the standard deduction for figuring the amount of exempt wages. If you are no longer married, both spouses can claim the standard deduction for their respective filing statuses.

Bank Levies Defined

A bank levy is a legal seizure of funds from your bank account to satisfy a tax debt. When the IRS issues a bank levy, your financial institution freezes the funds in your account up to the amount you owe. After 21 days, if the levy isn’t resolved, the bank sends these funds to the IRS.

Unlike wage garnishments, which take a portion of each paycheck, a bank levy can take all available funds in your account up to the amount of your tax debt. This means your entire account balance could be wiped out, leaving you without access to your money for bills, rent, or other essential expenses.

The IRS can levy various types of accounts, including:

• Checking accounts
• Savings accounts
• Investment accounts
• Retirement accounts
• Business accounts

Why These Actions Happen

The IRS doesn’t immediately resort to wage garnishments and bank levies. These actions typically occur after a series of notices and collection attempts have gone unanswered. According to the IRS collection process, before a levy can be issued, the IRS must:

1. Assess the tax and send you a Notice and Demand for Payment (your tax bill)
2. Receive no payment or inadequate response from you
3. Send a Final Notice of Intent to Levy and Notice of Your Right to a Hearing at least 30 days before the levy
4. Provide advance notification that they may contact third parties regarding your tax liability

If you ignore these notices or fail to make arrangements to pay your tax debt, the IRS has the authority to levy your property, including your wages and bank accounts. The best way to avoid these collection actions is to respond promptly to IRS notices and work proactively to resolve your tax issues.

There are limited circumstances where the IRS doesn’t need to let you know about the levy until after it takes place. Those situations are as follows:

• The IRS believes the collection of the tax is in jeopardy
• Levy of a state tax refund.
• Levy for tax debt owed by a federal contractor.
• Levy for unpaid employment taxes when the taxpayer has previously requested a Collection Due Process (CDP) hearing for employment taxes in the past two years.

Jeopardy levies aren’t common. They should only be used in situations where the taxpayer appears likely to flee the country, transfer their assets out of the country, or is about to become financially insolvent.

When any of these levies take place, you should still receive an IRS notice. It will inform you of your right to contest the levy after it takes pl

Steps to Stop Wage Garnishments and Bank Levies

Step 1: Understand Your Situation

The first step in stopping a wage garnishment or bank levy is to fully understand what you’re dealing with. Review all notices from the IRS carefully to determine:

• The exact amount of tax debt owed
• Which tax years are involved
• The deadline for responding to the notice
• Your appeal rights

If you’ve already received a Final Notice of Intent to Levy, you typically have 30 days to request a Collection Due Process (CDP) hearing. This is a critical opportunity to present your case and explore alternatives to the levy or wage garnishment.

Taking action is essential. The longer you wait to address the issue, the fewer options you’ll have and the more difficult it may be to resolve. If a levy has already been placed on your wages or bank account, immediate action is necessary to minimize the financial impact.

Step 2: Negotiate a Payment Arrangement with the IRS

One of the most effective ways to stop a wage garnishment or bank levy is to establish a payment plan with the IRS. Another way to have it stopped is to request an Offer in Compromise from the IRS.  While this is a selective program, if you can prove your financial situation does not allow you to pay the total amount you owe in taxes, you can work with a tax attorney to offer the IRS an amount lower than what you owe; sometimes they’ll even accept an offer amount significantly less than what the tax debt is.

If you are unable to pay the tax debt in monthly installments or qualify for an OIC, then you may be able to prove to the IRS that having your wages garnished would prevent you from taking care of the basic needs of you and your family. If that’s the case, then the IRS might temporarily suspend action until your financial situation improves.  To qualify for this, a program called Currently Not Collectible Status or simply CNC, you will need to work with a tax attorney to prove your financial situation.

Step 3: Challenge Wage Garnishments or Levies

In some cases, you may have grounds to challenge a wage garnishment or bank levy. The IRS must release a levy if it determines that:

• You’ve paid the amount owed
• The collection period ended before the levy was issued
• Releasing the levy will help you pay your taxes
• You’ve entered into an installment agreement that doesn’t allow for the levy to continue
• The levy creates an economic hardship
• The value of the property exceeds the amount owed and releasing the levy won’t hinder collection

If you believe a levy is causing an immediate economic hardship—meaning it prevents you from meeting basic, reasonable living expenses—contact the IRS immediately at the number on your levy notice. According to the IRS hardship guidelines, the IRS must release a wage levy that creates an immediate economic hardship and may release other types of levies as well.

You also have the right to appeal a levy through the Collection Appeals Program (CAP) or by requesting a Collection Due Process hearing by filing IRS F. 12153. These options allow you to present your case to an independent reviewer who can determine whether the levy is appropriate or if alternative collection methods should be considered.

If your appeal is denied, you still have options you can take before your wages are garnished. Some options include:

• Contest the appeal: If the IRS rejects your appeal, you can contest the ruling.  You must file this within 30 days of the appeal decision.  You should hire a tax attorney to represent you in these proceedings as the IRS requires that certain protocols be followed.
• File for wage garnishment exemption: If you lose your appeal and you cannot afford to have your wages garnished, you can ask the court for an exemption.  With the help of a tax attorney, you will need to prove our financial status and will need to provide documentation on your household income, your number of dependents, your rent or mortgage payments, utility bills, and other unique circumstances that can affect your ability to have your wages garnished.

Step 4: Seek Professional Help

A tax attorney with experience in resolving tax controversies can provide invaluable assistance in stopping wage garnishments and bank levies by:

• Analyzing your specific situation and identifying the best resolution options
• Communicating with the IRS on your behalf
• Preparing and submitting necessary IRS forms and supporting documentation
• Negotiating favorable terms for installment agreements or other resolution options
• Representing you in appeals or tax court (if necessary)

Consider seeking help from our team here at Ayar Law. Our tax attorneys will:

• Negotiate directly with IRS attorneys and revenue officers
• Represent you in Tax Court if necessary
• Provide legal advice about your options
• Offer attorney-client privilege for sensitive discussions

Remember that the key to successfully stopping wage garnishments and bank levies is taking action quickly. The longer you wait, the fewer options you’ll have and the more difficult it may be to find relief.