The LT16 warns you that the IRS intends to levy your wages. A wage levy is a continuous garnishment. Unlike a bank levy that grabs a one-time snapshot of your account, a wage levy takes a portion of every paycheck until the debt is satisfied, your employer stops paying you, or the IRS releases the levy.
How Much They Take
The IRS doesn't take 100% of your wages. They use Publication 1494 to calculate the exempt amount based on your filing status and number of dependents. Everything above the exempt amount goes to the IRS. For a single taxpayer with no dependents, the exempt amount is roughly $1,100 per month. On a $4,000 monthly paycheck, the IRS would take approximately $2,900.
That's not a typo. Wage levies are aggressive. They're designed to create immediate financial pressure that motivates resolution.
Responding to the LT16
If you still have time before the levy takes effect, contact the IRS immediately to negotiate. An installment agreement, offer in compromise, or currently not collectible determination can prevent or release the wage levy. If CDP hearing rights haven't been exhausted, file Form 12153 to stop the levy while the hearing is pending.
If the levy is already in effect, you can still negotiate release. The IRS must release a wage levy if you enter into an installment agreement, if the levy creates economic hardship, or if the underlying tax is satisfied. Call the number on the notice or have your representative contact the assigned Revenue Officer or ACS.
Your Employer's Role
Your employer is legally required to comply with the wage levy. They can't refuse. They can't fire you for having a wage levy (that's protected under federal law). They calculate the exempt amount using the information you provided on the Statement of Exemptions form that came with the levy notice, then send the rest to the IRS with each payroll.
If your wages are being levied or you received an LT16, call us at (813) 229-7100. We negotiate wage levy releases regularly.