5.11.5. Levy on Wages, Salary, and Other Income

(1) Internal Revenue Code IRC 6331(e), Continuing levy on salary and wages provides a levy on salary or wages has continuous effect from the time the levy originally is made until the levy is released pursuant to IRC 6343. The term salary or wages includes compensation for services paid in the form of fees, commissions, bonuses, and similar items.

(2) The Tax Cuts and Jobs Act of 2017 (TCJA) suspends the deduction for personal exemptions, and increases the basic standard deduction for individuals across all filing statuses, effective for taxable years beginning after December 31, 2017 and before January 1, 2026. The law added IRC 6334(d)(4), Years when personal exemption amount is zero.

(1) 15 USC 1674.

(2) IRC 6330 - Notice and opportunity for hearing before levy.

(3) IRC 6331 - Levy and distraint.

(4) IRC 6334 - Property exempt from levy.

(5) Treasury Regulations § 301.6331–1, Levy and distraint.

(6) Treasury Regulations § 301.6334–2, Wages, salary, and other income.

(7) IRM 1.2.1.6.6, Policy Statement 5-29, Levy on salary or wages—Generally limited to "take home" pay.

(1) The Director, Collection Policy is responsible for all policies within the levy program.

(2) The National Program Manager, Enforcement is responsible for development and delivery of policies within the levy program.

(3) Managers of employees who issue levies are responsible for ensuring these procedures are followed and employee actions are timely and accurate.

(4) Revenue officers and collection advisors are responsible for following the procedures in this IRM.

(1) Integrated Collection System (ICS) is used by field revenue officers as a method for generating levy documents that are issued to third party levy sources.

(2) The Collection Activity Reports (CAR) report number 5000–24 records the total number of levies issued. Total Levies are the sum of Field, SB/SE ACS and W & I ACS (monthly and cumulative). The data sources are the ACS Customer Service Activity Reports (CSAR) - Monthly Support Site Report (ACS Levies) and ICS (Field Levies). See IRM 5.2.4.11, Levy and Seizure Report (Report Symbol NO-5000-24). The IRS has determined that levy data may be made available as national statistics, provided that such data will never be used to evaluate any employee or to suggest or impose production quotas or goals. See IRM 1.5.2, Managing Statistics in a Balanced Measurement System, Uses of Section 1204 Statistics.

(3) Levy program numbers are published yearly in the IRS Data Book, Enforcement: Collections, Penalties & Criminal Investigation, in Table 16 at https://www.irs.gov/uac/enforcement-collections-penalties-criminal-investigation.

(4) Targeted program reviews are periodically performed by Collection Policy to determine whether IRM guidance requires clarification or revision.

(5) Management will ensure program effectiveness through managers' case reviews, operational reviews conducted by the territory, Area, and Field Collection Director, and NQRS reviews.

(1) National Quality Review System (NQRS), Attribute 416, Appropriate Enforcement Tools, Attribute 417, Managerial Approvals for Enforcement and 607, Taxpayer Rights provide independent collection review information from which management may draw inferences regarding overall case quality for this attribute. See IRM 5.13.1, Embedded Quality Administrative Guidelines.

(2) Embedded Quality Review System (EQRS), Collection managers use EQRS Attribute 416, Appropriate Enforcement Tools, and Attribute 607, Taxpayer Rights to complete all case reviews for revenue officers.

(3) Levy on salary or wages—Generally limited to "take home" pay. See IRM 1.2.1.6.6, Policy Statement 5-29.

(4) Programming safeguards are built into the ICS system to prevent a levy from being generated on a module where the required notices have not been issued. The ICS system also has controls to reflect the status of the levy, i.e, open, closed etc.

(5) Centralized Case Processing (CCP) monitors certain continuous levies in the same way manually monitored installment agreements are monitored. See IRM 5.4.11.4.1, Monitoring Continuous Wage Levies.

(1) The following table defines terms associated with the field levy program:

(2) See Exhibit 5.11.5-1 for list of Acronyms.

(1) The ICS User Guide, Chapter 10 - Levy, details all the functions necessary to maintain levy sources, issue levies and final demands, and close or release levies. See http://mysbse.web.irs.gov/collection/collsystems/ics/guides/userguide/default.aspx

(2) The National Levy Source Look-Up web page provides up-to-date levy source name and address information. See: https://acsweb.enterprise.irs.gov/nlsweb/pages/nl08.xhtml.

(3) The MySB/SE, Enforcement web page provides access to various information and job aids related to the levy program. See:http://mysbse.web.irs.gov/Collection/toolsprocesses/Enforcement/Levy/default.aspx.

(4) The Taxpayer Bill of Rights (TBOR) links to listing of those rights that already existed in the tax code, putting them in simple language and grouping them into 10 broad categories. See: https://www.irs.gov/taxpayer-bill-of-rights. For additional information, see IRM 1.2.1.2.36, Policy Statement 1-236, Fairness and Integrity in Enforcement Selection.

(5) Below are recommended resources, which can be used to address questions on levy guidance.

(1) The Notice of Levy on Wages, Salary, and Other Income (Form 668-W) was developed for use when an individual may be entitled to the minimum exemption from levy in IRC 6334(a)(9) and includes a Statement of Dependents and Filing Status. The employer gives the statement to the taxpayer to complete and return within three days. If it is not received by then, the exempt amount is figured as if the taxpayer is married filing separate with no dependents (zero). The taxpayer can give the statement to the employer later to change the exempt amount.

(2) Publication 1494, Tables for Figuring Amount Exempt From Levy on Wages, Salary, and Other Income - Forms 668-W(ACS), and 668-W(ICS), is sent with the levy to help figure the exempt amount.

(3) The taxpayer can give a new statement to the employer later to have the exempt amount recomputed. If a levy was served prior to January 1, 2018, the effective date of the TCJA, then the taxpayer’s exemption amount will have been calculated under the old law, and the exemption amount will not be accurate. Thus, taxpayers in this situation should be instructed to file a new statement with their employer so that the exempt amount is calculated consistent with the current law. Likewise, taxpayers whose exemption amounts were calculated after January 1, 2018 but prior to the Pub. 1494 being revised to reflect the TCJA should also be instructed to file a new statement with their employer.

(4) The statement is completed under penalty of perjury. Generally, accept the information on the statement, unless there is reason to question it. If dependents are disallowed, notify the employer and the taxpayer in writing. The taxpayer can provide evidence that the statement is right and request managerial review. Include a statement that the taxpayer may provide evidence to prove the statement is accurate and may request a managerial review of the disallowance.

(1) Some employers have a centralized payroll, so the payroll is not handled where most employees work.

(2) Consider mailing the Statement of Dependents and Filing Status directly to the taxpayer. This avoids the delay of the employer re-mailing it.

1. Send to the employer Part 1 of the levy form and Notice 484, Instructions to Employer with Centralized Payroll System for Processing Statement of Dependents and Filing Status.

2. Send to the taxpayer the other parts of the levy form and Notice 483, Instructions to Employee Paid through Central Payroll System for Submitting Statement of Dependents and Filing Status.

(1) For joint liabilities, generally levy the income of the spouse with the larger income.

(2) Levy both incomes only in flagrant cases of neglect or refusal to pay. Secure group manager approval to issue notices of levy on the income of both spouses living in the same household. If taxpayers are separated, consider collecting from both spouses' income rather than collecting from one spouse's income.

(3) When both spouses' incomes are levied, neither spouse can claim the other one as a dependent.

(1) Consider income from all sources when a taxpayer has more than one income source.

(2) Use ICS templates to generate Letter 1697.

(1) A levy legally attaches to the taxpayer's gross income minus the exempt amount; however, see IRM 1.2.1.6.6, Policy Statement 5-29. By policy, a levy only attaches the taxpayer's usual take home pay.

(2) Generally, allow the taxpayer to maintain deductions they already have when the levy is served. Notify the employer and the taxpayer of deductions that must stop while the levy is in effect. The taxpayer can request managerial review.

(3) Generally, employers should not allow new voluntary deductions after receiving the levy. Exceptions can be allowed on a case by case basis, with the Service's approval.

(1) The taxpayer may leave a job and get severance pay.

(2) This assumes the person is not already getting the exempt amount for a pay period at the same time. If both are being received, the taxpayer does not get the exempt amount twice.

(1) If a productive levy source is the only source of collection, group managers should approve the monitoring of levy payments as continuous by signing Form 4844, Request for Terminal Action, after ensuring the procedures outlined below have been followed.

(2) Group manager approval of the continuous wage levy in ICS is sufficient to reflect the action is authorized.

(3) The following types of levies can be monitored in a campus or Centralized Case Processing (CCP).

1. Continuous levies on wages and salaries

2. Levies that reach a taxpayer's fixed and determinable right to a series of payments, e.g., benefit and retirement or pension income or social security benefits. See IRM 5.17.3.5.2, Effect of Levy.

(4) If levy payments are received monthly, then transfer for monitoring after two consecutive levy payments have been received.

(5) If levy payments are received weekly or bi-weekly, then transfer for monitoring after 60 days.

(6) See IRM 5.1.11.7, Enforcement Determination to close the ICS Del Ret module when the Bal Dues are to be resolved by a continuous levy.

(7) Prior to transferring for systemic or manual monitoring,

• Ensure all open periods are included in the levy or levies.

  Note: Individual SRP modules (shown as MFT 35 or MFT 65) may not be included in a continuous levy.

• Ensure the payor (levy source) understands the levy remains in effect after the transfer.

• Ensure the payor understands where to send the levy payment.
  For a continuous levy that will be systemically or manually monitored, payments should be sent to the campus designated for the Area. See the Servicewide Electronic Research Program (SERP), Who/Where, Where to File – Forms and Payments, Campus Balance Due Accounts – Where to Send Payments at: http://serp.enterprise.irs.gov/databases/who-where.dr/where-to-file/where-to-file.html.
  Use the State address listed under "Without the CP521/523 Notice."

• Instruct the payor that payments should be payable to "United States Treasury."

• Request the check or draft reflect the taxpayer name and identification number, the tax periods included on the levy form, and "Levy Proceeds."

(8) Mail Letter 5112, Payment Instructions to Third Party Responding to Notice of Levy on Wages, Salary and Other Income to third parties responding to Form 668-W, Notice of Levy on Wages, Salary and Other Income. This letter provides the recipient with response and payment instructions, as detailed in IRM 5.11.5.6.1(6) and is auto generated after the CTLV is approved by the manager.

(9) When a case has been identified /selected for FPLP and the manager approves the ICS Option C - Continuous Levy; ICS will process and a TC 971, AC 061 will upload systemically. Once the TC 971, AC 061 is input a TC 972, AC 060 will systemically generate.

(10) If the taxpayer contacts the IRS requesting a release of levy after the continuous levy has been set up follow procedures in IRM 5.11.2.3, Releasing Levies, to determine if the levy should be released. The taxpayer may appeal as outlined in IRM 5.1.9, Collection Appeal Rights. Additionally, see IRM 5.1.9.4.1, Exclusions from CAP, for referrals to Taxpayer Advocate Service.

(1) Wage levies that result in regular remittances of about the same amount, may be monitored systemically if the earliest CSED is later than 18 months. For each levy with payment received from one levy source, request a review date:

• No more than five years in the future,

• 18 months prior to the earliest CSED if the earliest CSED is at least 24 months in the future, or

• 9 months prior to the earliest CSED if the earliest CSED is less than 24 months in the future.

Note: If fewer than 18 months remain prior to the CSED, a continuous wage levy must be monitored manually.

Note: Revenue officers cannot close a case module on a FPLP levy source without converting the FPLP levy to the paper levy. The FPLP excludes Status 60 modules. Status 60 is normally used for continuous levies or installment agreements. For guidance, see IRM 5.11.7.2.5.1, FPLP or Paper Levy (Form 668-A/668-W).

(2) For all continuous levies, if the levy source sends payments on a weekly or bi-weekly (every two weeks) basis, the levy may be monitored systemically using the monthly total of these payments. In this situation, monitor payments for 60 days to ascertain the correct monthly total to be entered on the Form 4844, Request for Terminal Action. Do not close the case on ICS until the Form 4844 is submitted for input.

(3) Do not input transaction code (TC) 971, action code (AC) 063 (Installment Agreement) on Bal Dues included in a continuous levy.

(4) Document the ICS case history with "Monitor Continuous Levy the same as IA."

(5) No TSIGN change is required for levy monitoring. Systemically monitored levies will be transferred to Compliance Service Collection Operation (CSCO) (formerly SCCB).

(6) To complete the ICS template version of Form 4844 choose "Contin. Levy - ST60" in Installment Agreement, Option C-Continuous Levy on ICS. The following information will be populated into the Form 4844:

1. Request for input of status 60;

2. "Suppress Default and Payment Reminder Notices";

3. The amount of the payment will be $$$ and will be received on the date # of each month;

4. Name of the employer/payor levied;

5. Address of employer/payor levied;

6. Telephone number of employer/payor levied;

7. "Input Installment Agreement Locator Number 0208";

Note: Installment Agreement Locator Number 0208 identifies these accounts as continuous wage levies on the Installment Agreement Account Listing (IAAL) in the campus. Proper identification of these accounts may result in fewer field case issuances on defaults.

8. For wage levies that will be released when the CSED expires, request input of TC 971 AC 687, misc. 002 for each module included in the continuous levy;

9. For levies that reach a fixed and determinable right to receive future payments (e.g., retirement or pension income, Social Security benefits) and will not be released when the CSED expires, request input of TC 971 AC 687, misc. 001 for each module included in the continuous levy. See IRM 5.19.10.4.6.1, TC 971 AC 687, and Miscellaneous Codes for CSED, for explanation of miscellaneous codes. See IRM 5.11.2.3.1.2, Statutory Collection Period Expired, for when levies do not have to be released.

(7) When approved the information from the Form 4844 is written into the ICS history. The group manager has the option to either email the approved Form 4844, or print and mail Form 4844 to CCP/General Case Processing Unit .

(8) Route the physical case file to CCP using the ICS generated Form 3210.

(9) CSCO will send Form 668-D, Release of Levy/Release of Property from Levy, one month prior to the account being full paid advising the employer of the amount to remit to full pay the levy.

(10) At the time of the review discussed in paragraph (1) above, campus Installment Agreement Account Listing (IAAL) personnel will:

• Attempt to secure an installment agreement to fully pay the taxes;

• Consider other avenues of collection such as offer in compromise or part pay installment agreement;

• Consider recommending the account(s) be reduced to a judgment.

(1) Some continuous levies cannot be transferred to CSCO for systemic monitoring in status 60. Transfer those continuous levies to Centralized Case Processing (CCP) for monitoring in the same way manually monitored installment agreements are monitored. The following types of accounts and levies must be monitored in CCP:

1. NMF accounts;

2. Accounts with a wage levy and fewer than 18 months remaining prior to the earliest CSED;

3. Accounts with an unreversed TC 971, AC 065 (claim pending for joint and several liability relief under IRC section 6015);

4. In-Business Trust Fund accounts;

5. Levies with irregular payments dates;

6. Levies with irregular payment amounts;

7. Levies with payments received from multiple levy sources

8. Levies on a spouse whose SSN is not the Bal Due account TIN;

9. Levies on seasonal employees unless payments will satisfy the Bal Dues.

   Note: Do not request manual monitoring of continuous FPLP payments. For guidance see IRM 5.11.7.2.5.1, FPLP or Paper Levy (Form 668-A/668-W).

(2) Do not input TC 971 AC 063 (Installment Agreement) on Bal Dues included in a continuous levy.

(3) Note the Bal Due account and document the case history, "Monitor Continuous Levy as IA."

(4) To complete the ICS template version of Form 4844 choose "Contin. Levy MMIA (CCP)" in Installment Agreement, Option C-Continuous Levy on ICS. Selecting this option will set the sub code to "902," the location field in the Name and Address will set to "LEVY." The following information will be populated into the Form 4844.

1. "Transfer to CCP for Manually Monitored Continuous Levy Payments";

2. The amount of the payment will be $$$ and will be received on the date # of each month;

3. Name of the employer/payor levied;

4. Address of employer/payor levied;

5. Telephone number of employer/payor levied;

6. For wage levies that will be released when the CSED expires, request input of TC 971 AC 687, misc. 002 for each module included in the continuous levy;

7. For levies that reach a fixed and determinable right to receive future payments (e.g., retirement or pension income, Social Security benefits) and will not be released when the CSED expires, request input of TC 971 AC 687, misc. 001 for each module included in the continuous levy. See IRM 5.19.10.4.6.1, TC 971 AC 687, and Miscellaneous Codes for CSED, for explanation of miscellaneous codes. See IRM 5.11.2.3.1.2, Statutory Collection Period Expired, for when levies do not have to be released.

(5) If fewer than 18 months remain in the statutory period for collection when the account(s) is being transferred to CCP and the levy will be released when the CSED expires, document the case history to include the following statement "CSED = (insert date). No suit recommended."

(6) If a copy of the levy form is not available in the case file, document the case history accordingly.

(7) The manager will review the case for approval and return the Form 4844 to the requestor. When approved the information from the Form 4844 is written into the ICS history and the manager is given option to either email or print the Form 4844, Form 3210.

(8) After approval, place a copy of the approved Form 4844 in the physical case file.

(9) Route the physical case file to CCP using the generated Form 3210.

(10) CCP will monitor continuous levies to ensure payments are received timely. If payments are not received, CCP will follow-up with the payor.

(11) CCP will send a notice of levy release one month prior to the account being full paid advising the payor of the amount due to full pay the levy. A notice of levy release will not be issued until:

1. All Bal Dues for which the levy was made are full paid;

2. The last CSED is about to expire so the wage levy is released far enough in advance that no payments are received for wages earned after the expiration of the CSED;

3. One of the criteria in IRM 5.11.2.3, Releasing Levies, exists;

(12) For CSED cases assigned for monitoring, CCP will:

1. Not release the wage levy if one or more CSED expires, but other periods included on the levy are within the statutory period for collection;

2. Monitor levy payments until all Bal Dues included on the levy are paid or the last CSED on a wage levy is about to expire, whichever comes first;

3. Follow the procedures in IRM 5.11.5.6.2, Systemic Monitoring of Continuous Levy Payments, above if some Bal Dues are full paid or the CSED expires on one or more but not all periods and the case now qualifies for systemic monitoring. Note on the copy of the levy form, "The following period(s) have expired CSEDs:" and list the applicable Bal Due periods.

   Note: If the levy form is unavailable, record this information in the case history and ensure a list of the tax periods on the original levy is included as well as the tax periods with expired CSEDs.