Montana Wage Levy Checklist
The Montana Department of Revenue enforces the collection of unpaid state income tax through a legal process that begins with filing a warrant for distraint. This warrant creates a lien against your property and authorizes the Department to issue a notice of levy to seize wages or bank accounts.
What This Issue Means
A wage levy directs your employer to withhold a portion of your wages and send the money to the Montana Department of Revenue Collection Services Bureau to satisfy unpaid tax liabilities.
Before issuing the levy, the Department files a warrant for distraint under Montana Code
Annotated 15-1-701, which creates a legal lien against your property.
Following the warrant filing, a notice of levy is issued under 15-1-706 MCA that has the same force and effect as a writ of execution. This levy continues for 120 days or until the judgment is satisfied, whichever occurs first.
Why the State Issued This
Montana issues a wage levy when you owe past-due tax balances and have not responded to earlier collection notices or payment attempts. Common triggers include unpaid income tax from prior years, unfiled tax returns that resulted in a balance owed, or failure to respond to correspondence about outstanding tax debt.
What Happens If This Is Ignored
Ignoring a wage levy does not stop the withholding from your paycheck. Employers continue deducting the specified amount each pay period for up to 120 days as directed by the notice of levy.
The Department may pursue additional collection action, including bank levy against funds in financial institutions, offsets to your tax refund, or filing additional warrants. Your debt continues to accrue penalties and interest during this time, increasing the total amount owed to the state.
What This Does NOT Mean
A wage levy does not mean your employment will be terminated or threatened. Montana Code
Annotated 39-2-302 prohibits employers from discharging or laying off employees because of garnishment served against wages.
Steps to Take After Receiving a Wage Levy
Follow these actions to understand your situation and respond appropriately
1. Locate and read the notice of levy carefully to identify the date issued, the amount being levied, the tax year it applies to, and your employer’s information.
2. Verify the debt amount listed matches your records for the specific tax year and type of tax owed.
3. Contact the Montana Department of Revenue Collection Services Bureau to confirm the levy is legitimate and obtain details about your account balance.
4. Confirm your employer received the notice of levy by asking your payroll department whether they have official notification from the Department.
5. Review your pay stubs after the levy begins to verify that the withheld amount matches the calculation on the garnishment formula worksheet.
6. Assess whether you can pay the debt in full or request a payment plan from the
Department.
7. Keep all correspondence from the Department, including the warrant for distraint, notice of levy, payment records, and letters received.
Additional actions include continuing to file tax returns on time even while under wage levy and documenting payments made through the levy process. If you change jobs, notify the
Department immediately and provide your new employer’s contact information because the
Department may need to issue a new notice of levy.
What Happens After Completion
The state will respond with information about your account balance and available options after you contact the Department and complete the steps above. Employers withhold the calculated amount each pay period for up to 120 days unless the debt is satisfied sooner or the
Department releases the levy.
Withheld funds are applied to your tax debt, and periodic statements showing the remaining balance may be sent by the Department. Payment plan agreements with the Department may result in levy release based on the agreement terms, but you must request written confirmation that the levy has been released.
Common Mistakes to Avoid
- Ignoring the notice of levy: Not responding does not make the levy disappear; it
continues withholding for 120 days.
- Failing to verify the amount: Without checking your account, you cannot identify errors
or confirm partial payments.
- Not contacting the Department early: Waiting too long to reach out limits your options
for resolution.
- Changing jobs without notification: The Department may pursue other collection
action if it cannot levy against your current employer.
- Assuming automatic release: Wage levy continues until the 120-day period ends or
the Department officially releases it.
- Not filing future returns: Continuing to ignore filing obligations creates additional tax
debt and collection problems.
Frequently Asked Questions
Can my employer terminate me because of the wage levy?
Montana Code Annotated 39-2-302 prohibits employers from discharging or laying off employees because of garnishment served against wages. State law protects your employment from termination solely due to wage levy.
How much can the state take from my paycheck?
Montana limits wage levy to the lesser of 25% of disposable earnings per pay period or the amount exceeding 30 times the federal minimum hourly wage. Specific exemption thresholds apply: $217.50 weekly, $435 bi-weekly, $471.25 semi-monthly, or $942.50 monthly.
How long does the wage levy last?
Montana Code Annotated 15-1-706 states that a levy upon earnings continues for 120 days or until the judgment is satisfied, whichever occurs first. The Department must issue a new levy to continue beyond 120 days.
Will the levy affect my credit score?
The wage levy itself is not reported to credit bureaus and does not appear on credit reports. The underlying tax debt may have indirect impacts, but Montana does not report wage levy to credit agencies.
Final Considerations and Next Steps
Receiving a notice of levy is manageable when you understand the process and take prompt action. Contact the Montana Department of Revenue Collection Services Bureau immediately to discuss your account balance and available options, including payment plans.
Facing State Enforcement or Payroll Tax Issues?
If you’ve received a state tax notice and aren’t sure how to respond, we can help you review your options and next steps.
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