Wage Garnishment vs. Bank Levy – Here’s What to Know

On: August 24, 2023

When you owe the IRS money, you can bet that they will come after you. When the IRs is not successful in contacting you or collecting the tax liability you owe, they will utilize additional collection efforts to get the money they are owed.

Both wage garnishments and levies are two options that the IRS can utilize against you, and both have serious financial implications associated with them. If the IRS has informed you that you will be subject to a wage garnishment or a levy, it is important that you retain an IRS tax expert to help you out.

Does the IRS Need a Court Order for a Garnishment or Levy?

No. While creditors need a court order from a judge to implement a levy or wage garnishment, the IRS is the exception to this. They do not need to go before a judge; they can garnish your wages and seize your assets quickly

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What is Wage Garnishment?

A wage garnishment is a legal order that is provided to your employer that demands and requires them to withhold a portion of your paycheck and send it to the IRS. The money is applied to the tax liability that you owe.

Your employer is not allowed to refuse the order and must comply with it. Unfortunately, when it comes to the IRS, they can take a large portion of your paycheck – much more than what a traditional creditor is limited to taking.

What is A Bank Levy?

A bank levy is another type of legal order that the IRS can use and when implemented, a levy works to freeze your bank account and seize the money that you have within the account.

Once a levy has been placed on your bank account, all money that is within it and all money that is deposited into it is frozen and you cannot withdraw it. The money is then seized by the IRS and applied to your outstanding tax liability.

Do I Lose All of the Money in My Bank Account with a Bank Levy?

No. The money is not all taken from you, but it is frozen. This means that you do not have access to it. The IRS can then seize the money and apply it to your tax liability.

Is All Income Subject to Garnishment or Levy?

No. Not all income can be levied or garnished. The IRS does have more leeway than traditional private creditors but there is still some income they cannot take from you. Some of the protected forms of income include:

• Child support
• Welfare benefits
• Social Security benefits
• Workers’ compensation
• Student loans
• Unemployment benefits
• Pensions
• Alimony

Leading Tax Group Can Help You if a Wage Garnishment or Bank Levy Has Been Placed 

If the IRS has informed you that they will be garnishing your wages or levying your bank account, it is important that you take action immediately. Ignoring the notice will set the ball rolling and soon you will be either frozen from your bank account or lose a large portion of your paycheck. Either of these collection efforts can leave you financially strained and in a bad position.

At Leading Tax Group, our team will work closely with you to ensure that you are compliant with the IRS and work towards a wage garnishment or bank levy release. The release process is complicated and the IRS can be difficult to work with, but our team has the knowledge and experience needed to get your income or bank account freed up.

Don’t try to fight a wage garnishment or bank levy on your own and turn to the team at Leading Tax Group today.