What Is Form 668-A? An IRS Notice of Levy Explained
An IRS Form 668-A notice of levy initiates a wage garnishment. This guide explains how the process works and the necessary steps to achieve a final resolution.
When the IRS intends to collect unpaid back taxes from a paycheck, it sends Form 668-W, “Notice of Levy on Wages, Salary, and Other Income,” to the taxpayer and their employer. This legal order compels an employer to garnish a portion of an employee’s wages to satisfy a tax debt. A Form 668-W establishes an ongoing garnishment that remains in effect until the tax debt is fully paid or other arrangements are made with the IRS.
Understanding the Levy Amount
A portion of a taxpayer’s income is protected from the levy, which is known as the “exempt amount.” This protected amount is calculated based on the taxpayer’s standard deduction, determined by their tax filing status and number of dependents.
Employers use IRS Publication 1494 to determine the precise exempt amount. These tables correlate the employee’s pay period, filing status, and number of dependents to a specific dollar amount shielded from the levy. Any wages earned above this exempt amount are sent to the IRS.
If a taxpayer does not submit their filing status and dependent information, the employer must calculate the levy using a default status of “married filing separately with zero dependents.” This status results in the smallest possible exempt amount, maximizing the garnishment.
Required Actions for the Taxpayer
Upon receiving a Form 668-W, an employer gives the employee several parts of the form. The taxpayer’s responsibility is to complete the “Statement of Dependents and Filing Status.” This requires checking the box for the correct filing status and listing each eligible dependent with their Social Security Number.
The taxpayer should not claim themselves as a dependent. After filling out the information, the taxpayer must sign and date the statement under penalties of perjury.
Once completed, the taxpayer must return the form to their employer, not the IRS, within three work days. Submitting this statement ensures the employer uses the correct information to calculate the exempt amount, protecting the maximum allowable portion of wages.
Options for Resolving the Underlying Tax Debt
Submitting the statement reduces the levy’s impact but does not resolve the underlying tax debt. To permanently stop the wage garnishment, the taxpayer must address the source of the problem. Successfully entering a resolution plan prompts the IRS to issue Form 668-D, “Release of Levy/Release of Property from Levy,” to the employer, ending the wage seizure.
Several resolution paths are available:
- Pay the tax debt in full.
- An IRS Installment Agreement sets up a monthly payment plan to pay the debt over time. This is requested by filing Form 9465, and an approved agreement generally results in the levy’s release.
- An Offer in Compromise (OIC) allows a taxpayer to settle their tax liability for less than the full amount owed. This option is for those with significant financial difficulty and has strict qualification requirements.
- Currently Not Collectible (CNC) status is for taxpayers facing severe economic hardship. The IRS may temporarily suspend collections, including levies, if a taxpayer cannot afford basic living expenses.
Proving eligibility for any of these programs requires detailed financial disclosure to the IRS.