Does the IRS Warn You Before Garnishing Wages?

The Internal Revenue Service (IRS) does provide advance warning before initiating a wage garnishment. The agency adheres to a structured process, ensuring taxpayers receive formal notification before enforcement actions, such as levying wages, are taken.

The IRS Collection Process Pre-Garnishment

Before the IRS garnishes wages, it follows a defined sequence of communications, allowing taxpayers to resolve outstanding tax liabilities. The process typically begins with an initial assessment of the tax liability, followed by a series of notices demanding payment. For example, a taxpayer might first receive a CP14 notice, which is a bill for unpaid taxes, penalties, and interest.

If the balance remains unpaid, subsequent notices, such as CP501 and CP503, may be issued, indicating the balance due and potential for collection action. These notices serve as escalating reminders of the unpaid tax and the IRS’s intent to collect the debt. While these early notices demand payment, they are not notices of intent to levy or garnish wages.

The IRS may also file a Notice of Federal Tax Lien. This is a legal claim against a taxpayer’s property, including real estate and financial assets, to secure the tax debt. While a lien establishes the government’s priority claim, it is separate from a levy or wage garnishment and does not directly authorize the seizure of wages or property.

The Official Warning Notice

The specific warning the IRS sends before it can garnish wages is a Notice of Intent to Levy. This notice is often issued as Letter 1058 or CP504, clearly informing the taxpayer of the IRS’s intention to seize property or wages to satisfy an unpaid tax debt. The issuance of this notice is a prerequisite for the IRS to proceed with a levy action.

This formal notice serves as a 30-day warning; the IRS must wait at least 30 days after sending it before legally levying wages or other assets. It explicitly states the amount of tax owed, the specific tax periods involved, and the IRS’s plan to take enforcement action. The notice also outlines the taxpayer’s rights, including the right to request a Collection Due Process (CDP) hearing.

The Notice of Intent to Levy provides the taxpayer a final opportunity to address the tax debt before enforced collection begins. It confirms that previous attempts to collect the tax have been unsuccessful and that the IRS is now moving to more aggressive collection methods.

Taxpayer Rights and Options After Receiving the Warning

Upon receiving a Notice of Intent to Levy, taxpayers have rights and options to prevent wage garnishment. A primary right is to request a Collection Due Process (CDP) hearing, which must be requested within 30 days of the notice date. A CDP hearing provides an opportunity to discuss the tax liability, dispute the appropriateness of the levy, or propose alternative collection resolutions with an independent IRS Appeals Officer.

During a CDP hearing, a taxpayer can present arguments against the levy or explore options such as an Installment Agreement. An Installment Agreement allows a taxpayer to make monthly payments over a period, typically up to 72 months, to pay off the tax debt. This option requires the taxpayer to be current with all filing and payment requirements for other tax periods.

Another resolution option available through a CDP hearing or directly with the IRS is an Offer in Compromise (OIC). An OIC allows certain taxpayers to resolve their tax liability with the IRS for a lower amount than what is owed, under specific circumstances where there is doubt as to collectibility or liability. This option is generally considered when a taxpayer’s financial situation prevents full payment of the tax debt. Responding promptly to the Notice of Intent to Levy within the specified timeframe helps preserve these rights and avoid enforced collection actions.