How to Remove IRS Wage Levy Release
When a U.S. federal taxpayer fails to file a return or pay his taxes on time, the Internal Revenue Service is entitled to place a levy on all of his property, including real property, personal property, bank accounts, accounts receivable and wages. The IRS can use a wage levy to garnish up to 70 percent of a taxpayer's wages. A wage levy may also cause the loss of employment. In many cases, however, an IRS levy can be released.
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Instructions
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Check the date of the most recent demand letter sent to you by the IRS concerning the tax bill that is the subject of the levy. If it is more than 10 years old, the statute of limitations has expired and you may demand (in writing) that the IRS immediately release the levy. You will also be relieved of the underlying tax burden.
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Collect documentation that the IRS wage levy will inhibit its ability to collect the full tax due. For example, if you regularly invest your wages in income-producing assets such as stocks or real estate, the IRS wage levy may impoverish you to the extent that you will never be able to fully pay your tax debt.
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Pay the IRS as much of your tax debt as you can afford (back taxes, interest and penalties). If you pay all of your outstanding tax debt, the IRS will release the levy. If you pay part of it, you may request that the IRS release part of the levy (reducing the garnishment from 70 percent to 30 percent, for example) as long as you can prove with documentary evidence that the levy causes you substantial economic hardship.
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Seek an installment payment plan with the IRS, the terms of which should specify the release of the levy as a condition of payment by installments.
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Contact the Taxpayer Advocate to advise you and to help you negotiate with the IRS (see Resources section).
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Appeal the IRS wage levy via the Collection Appeals Program (CAP) using IRS Form 9423. Collect documentary evidence establishing the basis of your objection to the IRS wage levy. You will be granted a hearing to present your case.
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Tips & Warnings
If the IRS has made a mistake concerning your tax liability (you do not owe what it says you do or you have already paid the tax), you may bypass the above procedure. Simply notify the IRS of its mistake and include documentary evidence. If the IRS still doesn't release your wage levy, proceed directly to the Collection Appeals Program.
You may not appeal an adverse CAP decision to a federal court except under extremely limited circumstances (evidence of IRS corruption, for example).
