Colorado Notice of Wage Garnishment Checklist
A Notice of Intent to Issue Tax Levy from the Colorado Department of Revenue is a formal notice telling you that the state plans to order your employer to withhold money directly from your paycheck to pay an unpaid state income tax debt. This notice is important because it indicates that the state has transitioned from sending bills to taking active collection steps, and your employer will be legally obligated to follow the order once issued. Ignoring this notice will not prevent the levy and may result in additional penalties or legal consequences. However, receiving this notice does not mean that your situation cannot be resolved.
What This Notice Means
The Notice of Intent to Issue Tax Levy tells you that you owe unpaid taxes, and the Colorado Department of Revenue has decided to collect that tax debt by instructing your employer to hold back a portion of your employee's wages each pay period. This is an administrative action, not a court order or court judgment. Your employer must follow the levy order or face penalties themselves.
This notice represents a significant step in the state's collection process, as it indicates that earlier attempts to collect the debt, such as bills or notices, have not resulted in payment, and the state has now moved to enforce collection through tax levies.
Why the State Sent This Notice
The Colorado Department of Revenue typically issues a Notice of Intent to Issue Tax Levy when a taxpayer has outstanding back taxes after prior collection attempts. In many cases, this happens when someone has not filed a tax return, has not paid taxes owed on a filed return, or has not responded to previous notices from the state.
The state's administrative process generally includes sending a Notice of Deficiency (with 30 days to respond), followed by a Final Determination and Demand for Payment. The state uses tax levies because they provide a reliable way to collect money owed without needing further action from the taxpayer.
What Happens If You Ignore This Notice
If you ignore a Notice of Intent to Issue Tax Levy, your employer will begin withholding money from your paycheck according to the state's instructions. The Colorado Department of Revenue generally sets the tax levy at 25% of your disposable income (your income after mandatory deductions, such as taxes and Social Security). The levy will continue until the debt is paid, a payment plan is established with the state, or a court order is issued to stop it.
You cannot ask your employer to ignore the order; they are legally required to follow it. Continuing to ignore the notice will not reduce your debt. The state may also impose additional penalties and interest on the original debt if it remains unpaid.
What This Notice Does Not Mean
This notice does not mean you are being criminally prosecuted or that the state is taking legal action against you in court (tax levies are administrative collection tools, not criminal or civil lawsuits). It does not automatically mean your property will be seized or that your bank accounts have already been frozen; those would be separate actions requiring additional steps. It also does not mean the debt cannot be resolved.
You still have options to contact the state, set up a payment plan, dispute the debt, or take other steps to address the underlying tax issue.
Checklist: What to Do After Receiving This Notice
Step 1: Read the Notice Completely and Find Key Information
Find and write down the following from your notice:
● Your tax identification number (usually your Social Security number).
● The tax year or years to which the debt is related.
● The total amount of the debt.
● The deadline by which you must respond or pay.
● The name and address of the Colorado Department of Revenue office that sent it.
● Any case number or reference number.
● Instructions for contacting the state.
Read through the entire notice at least once to understand its contents. Do not skim it. If there are sections you do not understand, you can look them up or contact the state directly for clarification.
Step 2: Verify That the Notice Is About You
Check that your name, address, and identification number are correct on the notice. If any of this information is wrong, note it. If the notice was sent to an old address and you have since moved, this is essential information for the state to have. If you recognize that the notice is about someone else (such as a spouse, family member, or someone with a similar name), you should contact the state to clarify the matter.
Step 3: Determine Whether You Believe the Debt Is Correct
Consider these questions:
● Do you recall filing a Colorado state tax return for the specified year?
● Did you pay the taxes you owed for that year?
● Are you aware of any unpaid Colorado state income taxes?
● Could the notice be about a payment you thought you made?
You do not need to decide immediately, but starting to think about whether the debt is real will help you when you contact the state. If you genuinely do not believe you owe the debt, note this down. If you are unsure, that is normal; you can ask the state to explain the debt.
Step 4: Check Your Recent Pay Stubs
Look at the most recent pay stub from your employer. See if a Colorado tax levy has already started. The levy may appear as a line item with a name such as "Colorado Levy," "CO Tax Levy," or similar wording. If you see it, note the amount being withheld. If you haven't seen it yet, check when the notice indicates the levy is scheduled to begin. Your employer may not have processed it immediately.
Step 5: Contact Your Employer's Payroll or Human Resources Department
Tell them that you have received a Notice of Intent to Issue Tax Levy from the Colorado Department of Revenue and ask:
● Whether they have received the order from the state.
● When the levy is scheduled to start.
● How much will be withheld from each paycheck (typically 25% of disposable income).
● Whether there are any questions they need you to answer.
You do not need to explain your personal situation to your employer. You are simply confirming that they have the order and understand the garnishment process. This conversation will help you know what to expect in your next paycheck.
Step 6: Gather Documentation About Your Tax Situation
Collect any documents related to your Colorado taxes:
● Copies of Colorado income tax returns you have filed.
● W-2 forms or 1099 forms from the year in question.
● Pay stubs from that year.
● Bank statements showing tax payments (if applicable).
● Correspondence from the Colorado Department of Revenue (letters, prior notices).
● Any records of payments you made to the state.
You may not have all of these, and that is okay. Gather what you have. You will likely need to send these to the state if you contact them or if they ask for them.
Step 7: Contact the Colorado Department of Revenue
This is an important step. Contact the Colorado Department of Revenue at the phone number listed on your notice or visit the official Colorado Department of Revenue website for the correct contact information. You can also write to the address shown on the notice.
When you contact them, tell them:
● You have received a Notice of Intent to Issue Tax Levy.
● You want to understand the debt and explore your options.
● You would like to know if a payment plan is available.
● You would like information about what you owe and why.
Do not promise to pay immediately. Simply listen to what they tell you and ask questions about what tax year the debt is from, whether the debt is accurate, what payment arrangements are available, what happens if you pay part of the debt now, and how the levy can be released. Write down the name of the person you speak with and the date and time of the call.
Step 8: Ask the Colorado Department of Revenue About Payment Plan Options
The Colorado Department of Revenue may offer installment plans or payment agreements that would allow you to resolve the debt without a tax levy. Ask about short-term payment plans (often 120 days or less), longer-term installment agreements, whether you must pay in full by a specific date, whether interest continues to accrue during a payment plan, and what happens if you miss a payment on a plan. Get the details in writing. If you speak with someone over the phone, ask them to send you a written summary of our conversation.
Step 9: Ask About Dispute or Review Options
If you believe the notice is in error or that the debt is incorrect, ask the Colorado Department of Revenue how you can request a review of the debt, whether there is a process to dispute it, whether you need to file a formal protest or appeal, and what deadline applies to any dispute you want to file. Write down their response. State guidance on dispute procedures for tax levies is not fully detailed in publicly available materials, so the state's response to this question will be necessary.
Step 10: Document Your Communication
Keep records of every phone call (date, time, person's name, what was discussed), every letter or email you send to the state, every response you receive from the state, and the name and phone number of anyone who helps you. These records protect you and help you remember what was agreed to. If the state makes a verbal statement, ask them to confirm it in writing.
Step 11: If You Reach a Payment Plan or Agreement, Get It in Writing
If the state agrees to stop the levy in exchange for a payment plan, do not rely on a verbal agreement. Request a written contract that outlines the payment plan terms, confirms the release or suspension of the levy order, specifies the payment amount and due date for each installment, and details the process for adjusting the payment amount if necessary. Do not make payments without a written agreement in place.
Step 12: If You Cannot Afford a Payment Plan, Explain Your Situation
If the state offers a payment plan that you cannot afford, explain your situation honestly. Tell them about your current income and expenses, any hardship you are facing, whether you have other outstanding debts, and what amount you can realistically pay. The state may have options available for individuals with limited income or those facing hardship situations. You can request a reasonable accommodation by submitting Form 6596 (Statement of Economic Hardship) and Form 6597 (Waiver of the Statute of Limitations) along with supporting documentation.
Step 13: If You Disagree With the Levy Order, Research Your Options
If you believe the levy is wrongful, illegal, or an error, you may have options to challenge it through administrative appeals. However, the specific process for doing this is not fully explained in standard state guidance. Consider seeking legal advice from a tax professional or attorney, directly inquiring with the Colorado Department of Revenue about your appeal rights, and consulting the Colorado Judicial Branch website for additional information. This is a situation where professional guidance may be helpful.
Step 14: Once You Have Information, Create a Plan
Based on the information you have gathered, decide what you will do: accept a payment plan offered by the state, pay the debt in full if you can, file a dispute or appeal if you believe there is an error, or contact a tax professional for help. Write down your plan and the steps you will take.
Step 15: Take Action and Follow Through
Whatever you decide, follow through on it. If you agreed to a payment plan, make payments on time. If you filed a dispute, respond to any follow-up questions. If you are waiting to hear back from the state, follow up if you do not receive a response within a reasonable timeframe (typically 10 to 15 business days for a phone call or email).
Common Mistakes to Avoid
● Assuming the levy will stop on its own: It will not. You must take action with the state or reach an agreement with them.
● Ignoring letters or phone calls from the Colorado Department of Revenue: These may contain important information about your debt or time-limited options.
● Making a verbal agreement with the state without getting it in writing: Always request confirmation in writing or via email.
● Quitting your job to stop the levy: The levy will follow you to your next job, and you will lose income for no benefit.
● Failing to respond to questions from the state or not providing the requested documents can delay resolution and may result in additional penalties.
Frequently Asked Questions
Will the tax levy stop immediately if I call the Colorado Department of Revenue?
Not automatically. The levy will typically continue until you reach a payment agreement with the state, pay the debt in full, or a court order stops it. Calling the state is the first step in initiating the process to stop it, but the process takes time.
How much will be taken from my paycheck?
The Colorado Department of Revenue generally sets the tax levy at 25% of your disposable income (your earnings after mandatory deductions, such as federal and state taxes, Social Security, and Medicare). This amount exceeds the 20% limit applicable to consumer debt garnishment under Colorado wage garnishment laws and the Colorado Revised Statutes. If you file jointly with a spouse or partner, both paychecks can be levied simultaneously, each at the 25% rate.
Can I lose my job because of the tax levy?
Colorado laws (C.R.S. 13-54.5-110) prohibit employers from discharging you for any single garnishment or levy. Federal law (Consumer Credit Protection Act) also prohibits termination for garnishment of any one debt. However, if you have multiple garnishment orders for different debts, these legal protections may not apply. It is generally better to contact your employer and the state proactively rather than wait for problems to develop.
If I pay the debt in full immediately, will the levy be stopped?
Generally, yes. If you pay the full amount owed (including any interest or penalties that have accrued), the state should stop the levy. However, confirm this with the state before sending payment. Ensure you are aware of the exact amount the state requires and the designated mailing address. For tax levy releases, payment must be made with certified funds (bank cashier's check or money order).
What if I disagree that I owe this debt?
Contact the Colorado Department of Revenue and ask them to explain why you owe the debt. Ask about your options to dispute or appeal the levy order. The specific process for disputes is not fully detailed in standard state guidance, so the state's response to your question will be necessary. Consider consulting with a tax professional.
How is a tax levy different from wage garnishment?
Tax levies and wage garnishment are both methods of collecting debt from your paycheck, but they work differently. The Colorado Department of Revenue uses administrative tax levies to collect state tax debts without needing a court judgment. Regular wage garnishment typically requires a court order from judgment creditors for consumer debts. Tax levies can account for up to 25% of disposable earnings. In comparison, garnishment limits for consumer debts under Colorado laws typically range from 20% of disposable earnings to the amount exceeding 40 times the minimum wage, whichever is less.
Are any of my earnings protected from tax levies?
Unlike consumer debt garnishment, where certain exempt earnings are protected under Colorado Rules of Civil Procedure, state tax levies have different rules. Federal benefits, such as Social Security benefits, Social Security Disability Insurance, and Supplemental Security Income, may offer some protection from bank account garnishment. However, state tax levies operate differently from regular garnishment orders. Contact the Colorado Department of Revenue to ask about exemption claims if you receive only federal benefits or have limited income.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance
