Yes. Being self-employed does not put your income out of reach. The IRS can levy money your clients owe you, your business bank account, and funds held by payment processors. Whether the levy reaches future payments depends on what is being levied and whether the payment qualifies for the continuous-levy rules.
The common belief that a 1099 earner cannot be garnished comes from a misreading of the statute. This page explains what the law says, how much the IRS can take from each payment, and how to stop it. Figures are current for 2026 and sourced to the Internal Revenue Code, the Treasury regulations, and the Internal Revenue Manual.
Yes, through a levy. There is no separate court process and no judgment required. Under 26 U.S.C. §6331(a), once you neglect or refuse to pay after notice and demand, the IRS may collect by levy on all property and rights to property belonging to you, other than what §6334 exempts.
Money your clients owe you is a right to property. So is the balance in your business account, the funds sitting with a card processor, and rent owed to you by a tenant. The IRS reaches all of it with a single administrative form.
Because the regulation broadly defines the term. Treasury Regulation §301.6331-1(b)(1) provides that for levy purposes, “the term salary or wages includes compensation for services paid in the form of fees, commissions, bonuses, and similar items.”
That single sentence is easy to miss. The dividing line in the statute is whether the payment is compensation for personal services, which triggers the continuous levy, not employee versus contractor status.
The IRS applies this directly to commissioned contractors. Internal Revenue Manual 5.11.5.3 instructs revenue officers to use the continuous wage levy form when levying a real estate brokerage to capture an agent’s commissions, and cites United States v. Jefferson-Pilot Life Insurance Co., 49 F.3d 1020 (4th Cir. 1995), where the Fourth Circuit held a levy served on an insurance company was continuous because the commissions paid to the salesman were salary or wages.
If you are a real estate agent, insurance producer, or other commissioned representative paid on a 1099, your commissions may be subject to a continuous levy under §6331(e), depending on the nature of the compensation and how the IRS serves the levy.
A continuous levy attaches to every future payment until released. A one-time levy reaches property and obligations that exist when it is served, which can include a right to a future payment if that right is already fixed and determinable.
Section 6331(b) sets the default: “Except as otherwise provided in subsection (e), a levy shall extend only to property possessed and obligations existing at the time thereof.” Subsection (e) is the exception, and it makes a levy on salary or wages “continuous from the date such levy is first made until such levy is released under section 6343.”
| Question | Form 668-W, continuous levy | Form 668-A, one-time levy |
|---|---|---|
| What it reaches | Every future payment of salary, wages, fees, or commissions | Only the obligation that exists when the levy is served |
| Who is served | The payer of your compensation, such as a brokerage or an ongoing client | A bank, a customer who owes an invoice, or a payment processor |
| Does an exempt amount apply | Yes. The Publication 1494 amount is protected from each payment | No. The full obligation goes to the IRS |
| Does it stop on its own | No. It runs until released, the debt is paid, or the collection statute expires | Yes. It is spent once the payment is surrendered |
| To take the next payment | Nothing more is needed | The IRS must serve a new levy |
The practical test is whether your right to the payment is already fixed and determinable. IRM 5.11.5.3 illustrates it with royalties: a levy reaches royalties on books already published, because the right to those payments exists. It does not reach royalties on books written and published later, and a new levy is required to take those.
Yes. Once the levy is properly served, the client generally has to comply rather than keep paying you.
Under 26 U.S.C. § 6332(a), any person in possession of or obligated with respect to property subject to levy “shall, upon demand of the Secretary, surrender such property or rights.” A client who refuses becomes personally liable for the amount not surrendered under § 6332(d)(1), and if the refusal lacks reasonable cause, adds a penalty of 50% of that amount under § 6332(d)(2). A client who complies is discharged from any obligation to you under § 6332(e).
That structure is why arguing with a client’s accounts payable department never works. The law puts their money at risk, not yours.
IRM 5.11.6.8 spells out what counts as a reachable receivable: “monies owed to the taxpayer by clients, customers, patients, insurance companies, rental income, funds processed by credit card companies.”
On a continuous levy, everything above a small exempt amount set by your filing status and dependents. On a one-time levy against a receivable, how much the IRS keeps depends on the nature of the payment, which the next section explains.
The exemption comes from 26 U.S.C. § 6334(a)(9). Because the personal exemption is currently zero, the amount is computed under § 6334(d)(4): the standard deduction plus a per-dependent figure, divided by 52. For 2026, that per-dependent figure is $5,300, set by Revenue Procedure 2025-32.
The IRS publishes the resulting tables in Publication 1494. These are the 2026 weekly figures.
| Filing status | Weekly amount exempt, no dependents | Each additional dependent |
|---|---|---|
| Single | $309.62 | Add $101.92 |
| Married filing jointly | $619.23 | Add $101.92 |
| Head of household | $464.42 | Add $101.92 |
| Married filing separately | $309.62 | Add $101.92 |
A single contractor paid weekly with three dependents keeps $615.38. Everything above that goes to the IRS, every week, until the levy is released.
One detail costs people real money. Section 6334(d)(4)(D) provides that unless you submit a properly verified statement of your filing status and dependents, the exempt amount is computed as though you were married filing separately with no dependents, which is the lowest figure on the table. The payer gives you that statement when the levy arrives, and the window to return it is short. Return it immediately.
The rules are different here than for a continuous wage levy. Form 668-A is generally used for business receivables, and it reaches the taxpayer’s property or obligations existing when the levy is served. The statutory exemption for wages, salary, and other income under § 6334(a)(9) can still matter for an individual taxpayer, but Form 668-A does not come with the same built-in filing-status and dependent statement used with Form 668-W. What can be retained from a $9,000 invoice therefore depends on the nature of the payment and the taxpayer’s circumstances, not on the form the IRS happened to use.
This is the part that surprises self-employed taxpayers, and it runs counter to the common assumption. A W-2 employee’s exempt amount is calculated automatically on every paycheck. A contractor whose receivables are levied has no such built-in protection, since the payer has no form or process for applying one.
A short statutory list, and nothing else. Section 6334(c) is blunt: no property is exempt from levy other than the property specifically made exempt by subsection (a). Michigan’s exemption statutes do not bind the IRS.
| Exempt category | 2026 limit | Authority |
|---|---|---|
| Fuel, provisions, furniture, personal effects, arms for personal use, livestock, poultry | $11,980 | 26 U.S.C. 6334(a)(2); Rev. Proc. 2025-32 |
| Books and tools of your trade, business, or profession | $5,990 | 26 U.S.C. 6334(a)(3); Rev. Proc. 2025-32 |
| Wearing apparel and school books | No dollar cap | 26 U.S.C. 6334(a)(1) |
| Unemployment benefits and workers compensation | No dollar cap | 26 U.S.C. 6334(a)(4) and (a)(7) |
| Judgments for the support of minor children | No dollar cap | 26 U.S.C. 6334(a)(8) |
| Certain service-connected disability payments and public assistance | No dollar cap | 26 U.S.C. 6334(a)(10) and (a)(11) |
| Certain business property | Generally exempt absent written approval from a senior IRS official or a jeopardy finding | 26 U.S.C. § 6334(a)(13)(B), (e) |
The $5,990 tools-of-the-trade cap matters most to tradespeople and anyone whose equipment is the business. Our page on which properties are exempt from IRS seizure covers the full list.
Then the rules get harsher in two specific ways.
First, the rate. Section 6331(h) allows a continuous levy on up to 15% of specified federal payments, but substitutes 100% “in the case of any specified payment due to a vendor of property, goods, or services sold or leased to the Federal Government.” The IRS collects these through the Federal Payment Levy Program, and notes that some contract and vendor payments are reduced by 100%. Section 6331(h) also applies notwithstanding § 6334, so the exempt amounts above do not protect you.
Second, the notice. Section 6330(f) lets the IRS levy a federal contractor first and send the hearing notice afterward, as a CP90C or CP297C. The usual 30-day warning does not apply to you. Our page on the Federal Payment Levy Program covers how these levies are processed.
Two different notices, each carrying 30 days, and they are frequently confused.
| Notice | What it does | Your window |
|---|---|---|
| Notice of intent to levy, 26 U.S.C. 6331(d) | Warns that a levy is coming. CP504 is this notice, and it authorizes a levy on your state tax refund | No levy on other property for 30 days |
| Final notice and notice of your right to a hearing, 26 U.S.C. 6330 | Triggers collection due process rights. Usually arrives as LT11, Letter 1058, or CP90 | 30 days to request a hearing on Form 12153 |
The distinction is not academic. A CP504 is not the § 6330 collection due process notice. A taxpayer who wants a CDP hearing has to request it within 30 days of the qualifying final notice, such as Letter 1058, LT11, or CP90. Section 6330(a)(1) is the provision that matters: no levy may be made unless the IRS notified you in writing of your right to a hearing before the levy was made.
At the hearing, you can raise collection alternatives, which § 6330(c)(2)(A)(iii) defines to include posting a bond, substituting assets, an installment agreement, or an offer in compromise. Request it on Form 12153 within the 30 days. Late requests get an equivalent hearing, which carries no right of review in Tax Court.
You get the levy released under § 6343, and you do it before your clients remit.
Timing is everything, and it differs by target. Section 6332(c) gives you 21 days on a bank levy, because a bank must surrender deposits “only after 21 days after service of levy.” That rule applies to banks and nothing else. A client served with a receivables levy has no waiting period and pays the IRS on the schedule they would have paid you.
The routes to a release are an installment agreement, currently not collectible status on economic hardship grounds, an offer in compromise, or showing the levy was improper. Escalation runs through the revenue officer’s manager, then the Collection Appeals Program on Form 9423, and the Taxpayer Advocate Service where hardship is immediate. In practice, agreeing to a payment plan releases the levy faster than winning the argument about whether it should have issued.
A release has to reach each payer that was levied. A levy already paid over cannot be clawed back by a later release, which is why the days after a levy lands matter more than the weeks after. Our guide to stopping IRS levies and wage garnishments walks through each option, and what happens when you owe back taxes covers the rest of the collection sequence, including passport certification.
The IRS generally will not approve an installment agreement for a taxpayer who is not current, and it will default the agreement if you fall behind again.
IRM 5.14.1.4.2 states the prerequisite directly: filing compliance means all required returns are filed or on an approved extension, and payment compliance means all required federal tax deposits and estimated tax payments are current. It adds that compliance “must be current from the date the IA begins” and that the taxpayer “must remain tax compliant for the entire term of the IA, or they will default on the agreement.”
For a self-employed person with no withholding, that means funding quarterly estimated payments on time while also paying down the old balance. Missing those payments can put the agreement into default and bring the levies back. Build the quarterlies into the monthly number before you propose it.
A levy on your receivables costs more than money. Clients learn you owe the IRS, and some of them stop calling.
Ayar Law handles IRS collection matters for self-employed taxpayers and small businesses across Michigan and throughout the United States, from offices in Farmington Hills and Grand Rapids. Call (248) 262-3400 to request a case review, or contact us through our website.
Last updated August 2026.
This page is general information about federal tax collection procedures. It is not legal advice, and reading it does not create an attorney-client relationship. Exempt amounts are adjusted annually, and IRS procedures change. Outcomes depend on the facts of each case, and prior results do not predict future outcomes. Speak with a licensed tax attorney about your own situation before responding to a levy.
