The Internal Revenue Service has reaffirmed its procedures for IRS wage garnishment and federal tax lien filing, emphasizing clarity and fairness in the appeal process. The agency said in a recent update that it continues to strengthen its collection appeals program to ensure taxpayers have accessible options to challenge or delay collection actions related to unpaid taxes.
Before the IRS can garnish wages, it must issue a series of IRS notices to the taxpayer, culminating in a Final Notice of Intent to Levy and Notice of Your Right to a Hearing. This formal notice warns that the agency is preparing to seize wages or bank accounts to collect tax debt.
The IRS sends these letters by certified mail, and taxpayers have 30 business days to respond or request a Collection Due Process hearing. Failure to act allows the IRS to move forward with a levy action. According to the agency, the exempt portion of wages depends on filing status and the standard deduction.
“When we issue a levy, a portion of wages is exempt, and the exempt amount will be paid directly to the employee,” the IRS explains in its wage levy guidance. If a taxpayer does not submit the required filing status form, the IRS calculates the exemption as “married filing separately with no dependents.”
Taxpayers who disagree with a levy or lien have multiple avenues for appeal. The Collection Appeals Program allows taxpayers to dispute IRS collection actions before or after enforcement. This includes issues involving installment agreements, trust fund recovery penalties, or a proposed levy.
While no specific form is required, the IRS recommends submitting Form 9423, Collection Appeal Request, to track the case. CAP offers faster resolutions than Collection Due Process hearings, but does not stop ongoing collection activities. Outcomes under CAP cannot be appealed to the tax court.
The program also enables taxpayers to dispute a federal tax lien filing or request withdrawal when the IRS rejects a previous installment agreement. The appeal typically begins with the manager of the IRS employee. If a taxpayer believes the IRS employee made an error, they can escalate the issue to a collection manager, who must respond within two business days.
The Collection Due Process hearing provides broader protection because it suspends collection while the matter is under review. Taxpayers can request this hearing by filing IRS Form 12153 within 30 days of receiving the final notice.
If the IRS disallows the request or the taxpayer misses the deadline, an equivalent hearing may still be requested within one year; however, collection activities will continue. During a CDP hearing, an independent appeals officer reviews the case, the taxpayer’s financial situation, and any underlying tax liability.
The appeals review may include discussion of collection alternatives such as installment agreements, an offer in compromise, or temporary suspension of enforcement due to economic hardship.
“The Office of Appeals operates independently of the IRS collection function,” the agency notes in Publication 1660. “Appeals officers make impartial decisions based on the law and the facts presented by both sides.”
If unpaid taxes remain unresolved, the IRS may issue a Notice of Federal Tax Lien. This filing alerts creditors that the government has a legal claim on the taxpayer’s property, including real estate or business assets.
Taxpayers can dispute the filing through CAP or CDP hearings if they believe the lien was issued in error. In some instances, liens can be withdrawn after payment or when a valid installment agreement is established.
Revenue officers are required to inform taxpayers about their appeal rights when issuing a lien or levy notice. Failure to do so may justify a review under the appeals review process or fast-track mediation.
“Taxpayers should be aware of their right to appeal collection actions, including wage garnishments and federal tax liens,” an IRS spokesperson said in a recent statement. “The collection appeals program and CDP hearings give taxpayers a fair opportunity to resolve disputes before enforcement.”
Tax professionals also urge taxpayers to respond quickly once a notice arrives. “Once the IRS sends a notice of intent to levy, time is critical,” said Lisa Grant, a tax attorney based in Atlanta. “Submitting a timely appeal or demonstrating economic hardship can stop the levy before it starts.”
According to the IRS, communication with the assigned revenue officer or collection manager often prevents unnecessary escalation. “If you disagree with an IRS decision, contact the employee’s manager,” the agency advises. “Most collection issues can be resolved without a levy.”
The IRS must release a levy if it determines that the action causes financial hardship. Taxpayers can submit documentation, such as pay statements or expense records, to demonstrate that the levy prevents them from meeting their reasonable living expenses.
In cases involving levied property or seized bank accounts, the agency may consider releasing the levy if other arrangements are made. Taxpayers may also apply for fast-track mediation when collection actions or IRS decisions remain in dispute.
The IRS Independent Office of Appeals continues to ensure that taxpayers have access to impartial resolution options. The office’s separation from the enforcement division assures that appeals are reviewed under established procedures rather than internal collection priorities.
For taxpayers with outstanding tax debt or pending collection actions, understanding the appeal process is essential. Acting quickly after receiving a final notice can help prevent a levy and protect income or assets.
Both CAP and CDP hearings provide taxpayers with a path to challenge IRS decisions, negotiate installment agreements, or demonstrate financial hardship. Those who ignore notices risk more serious actions, such as wage garnishment, bank levies, or the filing of a federal tax lien.
Taxpayers can find additional guidance in IRS Publication 1660 and related resources. The agency encourages anyone facing collection actions to consult a tax professional or the Taxpayer Advocate Service for assistance.
By William Mc Lee, Editor-in-Chief & Tax Expert—Get Tax Relief Now
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