What Are Your Options After Receiving An IRS Garnishment Letter?

You check your paycheck and notice a big chunk is missing. Then, you receive a letter from the IRS. They are garnishing your wages to collect unpaid taxes. What now?

An IRS wage garnishment is serious. Unlike other creditors, the IRS does not need a court order. They can take a portion of your paycheck until your debt is paid. If ignored, they can also place liens on your property or seize assets.

This can make it hard to cover rent, bills, and daily expenses. The good news? You have options to stop or reduce the garnishment, but you must act fast.

This guide will explain:

• How IRS wage garnishment works and why it happens.
• Your best options are to stop or reduce it.
• How to prevent future garnishments and stay compliant.

Taking action quickly can help you protect your income and avoid further financial strain. Let’s go over your options.

What Is an IRS Wage Garnishment Letter?

An IRS wage garnishment letter is an official notice that the IRS will deduct money from your paycheck due to unpaid taxes. This action happens after multiple warnings and unpaid balances.

How the process works:

1. Taxpayers receive multiple warnings from the IRS, including a Final Notice of Intent to Levy (LT11 or CP297).
2. You have 30 days to respond before garnishment starts.
3. The IRS orders your employer to withhold a portion of your paycheck.
4. The deductions continue until the tax debt is paid, or another resolution is reached.

How It Differs from an IRS Levy

A levy allows the IRS to seize other assets like bank accounts, Social Security, or property. Wage garnishment is just one form of levy, targeting earnings directly.

What IRS Notices Lead to Wage Garnishment?

Before garnishing wages, the IRS sends several warning notices. Ignoring these notices leads to automatic deductions from your paycheck. 

1. CP14 – Balance Due Notice: First notice of unpaid taxes.
2. CP501 – Reminder Notice: Follow-up warning.
3. CP503 – Urgent Notice: Stronger warning of collection action.
4. CP504 – Intent to Levy Notice: IRS threatens asset seizure.
5. LT11 / CP297 – Final Notice of Intent to Levy: Last chance to respond before garnishment.
6. CP90 – Final Levy Notice (for federal benefits).

Learn all IRS certified letters.

How Much of Your Paycheck Can the IRS Take?

The IRS calculates wage garnishment based on your filing status, dependents, and pay frequency. Unlike private garnishments, IRS garnishments leave only a small exempt amount for living expenses.

Factors affecting garnishment amounts:

• Higher income means more is garnished.
• More dependents increase the exempt amount.
• Other IRS collections, such as levies on multiple tax debts, follow the same exemption rules. However, simultaneous garnishments, like child support deductions, can further reduce take-home pay.

Immediate Steps After Receiving an IRS Garnishment Letter

Receiving an IRS garnishment letter is stressful, but ignoring it only makes things worse. Acting quickly gives you more options to stop or reduce the garnishment.

Step 1: Do not Ignore the Letter 

If you ignore the IRS notice:

• Wage garnishment will continue until the full debt, plus penalties and interest, is paid.
• Your employer is legally required to comply.
• The IRS may escalate actions, including bank levies or asset seizures.

You have more options if you respond before garnishment starts.

Step 2: Read and Understand Your IRS Notice

The IRS sends a Final Notice of Intent to Levy (LT11 or CP297), giving you 30 days to respond before garnishment begins.

Check your notice for:

• The total amount owed (including penalties and interest).
• The type of debt (income tax, self-employment tax, payroll tax).
• The deadline to take action.

If the debt seems wrong, you may be able to dispute it.

Step 3: Verify That the IRS Debt is Correct

Mistakes happen. Before paying or negotiating:

• Log into your account at IRS.gov to check your balance.
• Compare it to your tax returns and past payments.
• Call the IRS at 800-829-1040 to request a breakdown of the debt.

Errors can be disputed before garnishment starts.

Step 4: Know Your Rights as a Taxpayer

The IRS can garnish wages but must follow legal limits.

• Garnishment is based on your income, filing status, and number of dependents, but they don’t leave much.
• Some income, like Supplemental Security Income, is fully protected, but the IRS can levy Social Security benefits for tax debts, with some exemptions.
• You have the right to:
  • Request a Collection Due Process (CDP) hearing before garnishment starts.
  • Appeal an incorrect garnishment.
  • Set up a payment plan or settlement.

Step 5: Choose Your Best Option

Once you understand your situation, you can choose your best option. Keep reading to learn your options in detail. We explain them in the other section.

Options to Stop or Reduce IRS Wage Garnishment

1. Pay the Tax Debt in Full (Fastest Option)

Paying your debt in full immediately stops wage garnishment. Once paid, the IRS releases the garnishment, usually within 30 days.

How to find your payoff amount:

• Check your balance online at IRS.gov.
• Call the IRS at 1-800-829-1040.

How to pay:

• Online payment 
• Check or money order to the US Treasury
• IRS Taxpayer Assistance Center

Drawbacks:

• Not realistic for most people with large tax debts.
• Can create financial strain.

2. Set Up an Installment Agreement (Monthly Payments)

An installment agreement lets you pay over time, stopping garnishment, as long as payments are on time.

• Short-Term Plan: Debts under $100,000, paid within 180 days.
• Long-Term Plan: Debts under $50,000, paid over up to 72 months.

How to apply:

• Online at IRS.gov.
• Call 1-800-829-1040.
• Submit Form 9465 (Installment Agreement Request) by mail.

Drawbacks:

• Interest and penalties continue to add up.
• IRS may still file a tax lien.

3. Submit an Offer in Compromise (Settle for Less)

An Offer in Compromise (OIC) lets you settle your tax debt for less if you qualify.

Who qualifies?

• You cannot afford to pay the full debt.
• Paying would cause financial hardship.
• The IRS is unlikely to collect the full amount.

How to apply:

• Submit Form 656 and Form 433-A.
• Pay a $205 application fee, non-refundable (unless low-income).
• IRS decides based on your income, expenses, and assets.

Drawbacks:

• The IRS rejects many OIC requests, though exact rates are not disclosed. The process can take several months to over a year.

4. Apply for Currently Not Collectible (CNC) Status

If you cannot afford payments, you can request a Currently Not Collectible (CNC) status. This temporarily stops wage garnishment.

How it works:

• The IRS reviews your income, expenses, and assets.
• If approved, the IRS pauses collections until your finances improve.

How to apply:

• Call 1-800-829-1040.
• Submit Form 433-F with proof of financial hardship.

Drawbacks:

• Status is temporary. If income rises, garnishment may resume.
• Interest and penalties continue to grow.

5. File a Collection Due Process (CDP) Appeal

If you believe the IRS wrongfully garnished your wages, you can file a CDP appeal to stop or delay it.

When a CDP appeal is valid:

• You did not receive proper IRS notice.
• You already set up a payment plan, but garnishment continued.

How to file:

• Submit Form 12153 within 30 days of the IRS notice.
• Provide proof of why the garnishment should stop.

Drawbacks:

• The appeals process takes time.
• If denied, garnishment continues.

6. Contact Professional Tax Help

A tax professional can negotiate with the IRS and find the best solution for your case.

Who can help?

• Tax attorneys: Handle legal disputes and appeals.
• CPAs: Help with tax compliance and planning.
• Enrolled agents: Represent taxpayers before the IRS.

How they help:

• Negotiate installment agreements or OIC settlements.
• File appeals or request CNC status.
• Represent you in Tax Court if needed.

Drawbacks:

• Professional fees vary.
• Not all tax firms deliver results. Research before hiring. 

How to Prevent Future IRS Garnishment Issues

You can avoid IRS wage garnishment with proactive steps.

• If you owe taxes but have not reached garnishment, set up a payment plan.
• File on time even if you cannot pay in full.
• Make estimated tax payments if self-employed.
• Check withholdings to ensure proper tax deductions.
• Use IRS tax relief programs before it is too late.
• The IRS sends multiple warnings before garnishing wages, respond to them. 
• Work with a tax professional for long-term compliance.

Ignoring an IRS wage garnishment will not make it go away. If you have received a garnishment letter, don’t wait. Speak to a tax professional to protect your income. Contact us.