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1. Obtain and review the levy notice
Ask the taxpayer or employer for a complete copy of Form 668-W, Notice of Levy on Wages, Salary, and Other Income. Review the taxpayer's name and Social Security number, the tax years and forms included, the total balance shown, the IRS contact telephone number, the assigned revenue officer (if applicable), the employer's payroll contact and fax number, the date the employer received the levy, and the next payroll processing date. Having the employer's direct fax number is especially important because the IRS may fax the release directly to payroll.
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2. Determine how much of the paycheck is exempt
An IRS wage levy generally does not take the taxpayer's entire paycheck. A limited amount is exempt based on filing status, pay period, and number of dependents. The employer should give the taxpayer the Statement of Dependents and Filing Status included with Form 668-W; the taxpayer should complete and return it within three days. If it is not returned within three days, the exempt amount is figured as if the taxpayer were married filing separately with no dependents. The applicable exemption is determined using IRS Publication 1494, which the IRS mails to the employer with the levy.
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3. Confirm tax filing compliance
Before agreeing to most collection alternatives, the IRS will ordinarily require the taxpayer to be current with required tax returns. Determine whether all required individual and business returns have been filed, current payroll tax deposits are being made, current estimated tax payments are being made, any recently filed returns have not yet posted, and whether the IRS is requesting a return that is not actually required. If returns are missing, prepare and file them as quickly as possible and be prepared to provide proof of filing if the IRS system has not been updated.
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4. Prepare the financial information
If the taxpayer cannot afford the wage levy, the IRS will usually request a financial statement — Form 433-F, Form 433-A for wage earners and self-employed individuals, or Form 433-B for businesses. Gather supporting documents before contacting the IRS: three recent paystubs, three months of bank statements, current mortgage statement or lease, utility bills, vehicle loan statements, health insurance and medical expenses, childcare or dependent-care expenses, court-ordered payments, proof of tax withholding, a recent profit-and-loss statement if self-employed, and documentation of any unusual or emergency expenses. The goal is to show actual monthly income, allowable living expenses, available assets, and ability — or inability — to pay.
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5. Choose the appropriate reason for release
Under IRC §6343(a)(1), the IRS is required to release a levy when it determines that one of the statutory grounds applies. Economic hardship: the IRS must release the levy if it determines the levy prevents the taxpayer from meeting basic, reasonable living expenses (such as housing, utilities, food, transportation, and healthcare); the taxpayer must show this with financial information. Installment agreement: release is required when the taxpayer enters into an installment agreement and its terms do not allow the levy to continue — get explicit confirmation that the levy will be released on approval. Currently Not Collectible: if the taxpayer has no ability to pay after basic living expenses, request CNC status. For a levy on salary or wages, IRC §6343(e) requires the IRS to release the levy as soon as practicable once the IRS agrees with the taxpayer that the tax is not collectible — simply asking for hardship relief does not by itself trigger this rule. Other statutory grounds: release is also required when the liability is paid, the collection period ended before the levy was issued, releasing the levy will help the taxpayer pay the taxes, or the value of the levied property exceeds the amount owed and release will not hinder collection. An incorrect assessment or misapplied payment should be raised with the IRS as a reason the balance is not owed. Offer in Compromise: submission alone does not guarantee immediate release, so make a separate specific hardship request.
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6. Contact the correct IRS office
Start with the number printed on Form 668-W or the most recent IRS collection notice. The case may be handled by the Automated Collection System (ACS), an assigned revenue officer, a specialized collection unit, or the Taxpayer Advocate Service. During the call: verify you are speaking with the office controlling the levy, confirm all tax periods included, explain the requested basis for release, provide the completed financial statement, offer supporting documents, request an immediate release or temporary hold, provide the employer's payroll fax number, ask when the release will be transmitted, and record the representative's name, ID number, call time, and commitments. If a representative is acting for the taxpayer, the IRS will require a valid Form 2848.
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7. Obtain and verify the release
A verbal statement that the levy will be released is not enough. Ask for the written release — Form 668-D, Release of Levy/Release of Property from Levy — to be sent to the employer. Confirm the IRS sent the release to the employer, the correct fax number was used, payroll received and processed it, the release covers every tax period on the levy, and it arrived before the payroll cutoff so future paychecks will no longer be reduced. A release received after payroll has already processed may not stop that particular deduction.
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8. Appeal a refusal to release the levy
If the IRS refuses to release the levy, the taxpayer may have appeal rights. A Collection Due Process hearing is requested using Form 12153 within 30 days of the date on the Final Notice of Intent to Levy (for example, Letter 1058 or LT11). If that deadline is missed, an equivalent hearing may be requested within one year of the notice date, but its decision generally cannot be taken to Tax Court. The Collection Appeals Program is available before or after a levy and is usually faster, but a CAP decision cannot be challenged in court. See IRS Publication 1660, Collection Appeal Rights.
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9. Request Taxpayer Advocate assistance when necessary
The Taxpayer Advocate Service may help when the levy is causing significant financial hardship and ordinary IRS channels have not resolved the problem — threatened eviction or foreclosure, inability to buy food or medication, utility disconnection, loss of transportation needed for work, IRS delay in issuing an agreed release, or immediate harm that cannot wait for normal processing. Assistance may be requested using Form 911, Request for Taxpayer Advocate Service Assistance. Include the levy, financial information, proof of hardship, prior IRS contacts, and the specific relief requested.
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After the levy is released
A levy release stops the wage garnishment, but it does not erase the tax debt. The taxpayer must comply with the resolution established with the IRS. To prevent another levy: file all future returns on time, make every agreed payment, maintain adequate wage withholding, make required estimated tax payments, make payroll tax deposits when applicable, respond promptly to new IRS notices, and notify the IRS if the financial situation changes. Penalties and interest keep accruing on the unpaid balance; if some penalties were caused by circumstances outside the taxpayer's control, or the taxpayer has a clean compliance history, penalty relief may be worth reviewing separately.
