The IRS can generally seek collection of the full amount you owe in back taxes, penalties, and interest by levying your property. This could mean that your entire bank account is drained or that other assets are seized and sold to pay off your tax debt.
There are some forms of levies with limitations on how much can be levied, such as wage garnishments and levies of Social Security benefits.
Exemption Amounts for Wage Levies
A wage garnishment is a collection method that takes a portion of your paycheck and applies it towards your tax debt each pay period. Your employer is required to comply with the IRS levy order—the money will be taken out of your check before you even get paid.
There is an exempt amount that can’t be levied, based on your filing status and how many dependents you claim. You may find it difficult to live off of this amount if you are the primary earner in your family.
For example, a Head of Household with one dependent gets to take home $1,845.83 per month. Everything you earn above that amount will be transmitted directly to the IRS.
If you receive bonuses or commission checks beyond your base salary, 100% of those additional amounts can be garnished by the IRS.
Social Security Benefits Levies
Social Security retirement and survivors benefits can also be levied by the IRS. They can garnish 15% of each benefits check you receive.
There is no exempt amount for Social Security benefits. Whether your monthly check is $200 or $2,000, the IRS can take 15% of it every month until your balance is paid.
There’s also nothing limiting the IRS to a single enforced collection method. If your wages or benefits are being garnished, you could still be hit with another type of levy, such as a bank account levy.
Alternatives to Levies
You can avoid most levies by reading all of the notices you receive from the IRS and cooperating with the IRS. A tax attorney can help you find the tax resolution option that works best for your situation, whether it’s a monthly installment plan, Offer in Compromise, or another alternative to having your assets or wages levied.
Get help with IRS tax debt problems by calling The Gartzman Law Firm at (770) 939-7710. We can help stop bank account levies and wage garnishments before they happen and find a creative solution to your tax problems.