Receiving a Form 668-W from the IRS indicates that a wage levy is being imposed to collect outstanding tax debts. This form notifies employers to withhold a portion of an employee’s wages, including salary, commissions, and bonuses, to satisfy the tax liability. Understanding the responsibilities and steps for both employers and employees is crucial in navigating this process effectively.
Next Steps for Employers
Immediate Action Required: Upon receipt of Form 668-W, employers must act promptly to comply with IRS requirements.
- Provide Necessary Forms to the Employee:
- Deliver parts 2, 3, 4, and 5 of Form 668-W to the affected employee immediately.
- Request that the employee completes the Statement of Exemptions and Filing Status within three days.
- Calculate Exempt and Non-Exempt Amounts:
- Use the employee’s completed statement to determine the exempt portion of their wages.
- Refer to IRS Publication 1494 to calculate the exact exempt amount based on the employee’s filing status and number of dependents.
- Remit Non-Exempt Wages to the IRS:
- Subtract the exempt amount from the employee’s total wages to determine the non-exempt portion.
- Send the non-exempt wages, along with part 3 of Form 668-W, to the IRS prior to the next payroll period.
- Coordinate with Payroll Processing:
- Inform your Human Resources department or third-party payroll service about the wage levy to ensure proper handling.
Legal Obligations and Penalties:
- Employers are legally required to comply with the wage levy. Failure to do so can result in the employer being held liable for the owed debt, plus additional penalties.
- It is against federal law to take adverse actions, such as terminating an employee, due to a wage levy.
Duration of the Levy:
- The wage levy remains in effect until the debt is fully paid or the IRS issues a formal release of the levy.
Next Steps for Employees
Understanding the Wage Levy Process:
- A wage levy is typically a final step after the IRS has made multiple attempts to collect unpaid taxes.
- Prior notices include a Notice and Demand for Payment and a Final Notice of Intent to Levy and Notice of Your Right to a Hearing.
Completing the Statement of Exemptions and Filing Status:
- Fill out the statement provided by your employer promptly, indicating your filing status, number of dependents, and pay period.
- This information determines the portion of your wages exempt from the levy.irs.gov
Options to Address the Levy:
- Full Payment: Pay the total tax debt to have the levy released.
- Installment Agreement: Negotiate a payment plan with the IRS.
- Offer in Compromise: Settle the debt for less than the full amount owed, if you qualify.
- Financial Hardship: If the levy causes significant financial hardship, you can request a release by demonstrating your situation to the IRS.
Important Considerations:
- The levy will continue until the debt is resolved or the IRS releases the levy.
- Proactively communicating with the IRS can lead to alternative arrangements and potentially stop the levy.
Get Professional Tax Debt Help
Navigating an IRS wage levy can be overwhelming, but you don’t have to face it alone. At Tax Resolution, our team, including former IRS employees, has over 40 years of experience helping individuals and businesses resolve tax issues. We provide straightforward advice and personalized solutions, including installment agreements and offer in compromise options. Don’t wait for the IRS to take further action. Call us at 1-800-270-8616 or visit our website for a confidential consultation today.