Handling an IRS Notice of Levy
If you have received a Notice of Levy from the IRS of an employee's
wages or for monies owed to a creditor, you have obligations as well as
rights. First, remember that the Notice of Levy is not for taxes that
you owe, but rather is for taxes that may be owed by the person levied
upon. Under Federal and State Law, a wage execution cannot be cause for
terminating an employee.
What Has to be Paid to The
IRS?
Wage Execution
The employee completes part four of the form indicating their marital
status and exemptions. As the employer, you calculate the amount to be
withheld from the employee's wages and turned over to the Internal
Revenue Service.
Frequently, new and lower paid employees
quit employment upon the wage execution because there is little
incentive for them to work with a significant portion of money being
paid to the Internal Revenue Service. Therefore, you should encourage
them to seek advice of a tax attorney to resolve their tax
problems.
Other Levies
If you owe money to a creditor and you receive a levy, you are required
to discontinue making payments to that creditor. Nevertheless, you are
not required to pay anything to the Internal Revenue Service unless you
are going to pay that to the creditor. For example, if you choose not
to pay the creditor for any reason, you do not have to pay the Internal
Revenue Service either. The IRS can only collect monies that are
actually due and owing to the creditor, and they cannot force you to
pay additional monies, disputed monies, or monies that you have chosen
not to pay the creditor for any reason. Your liability to the Internal
Revenue Service is only based upon a payment to the creditor instead of
the Internal Revenue Service after a Notice of Levy is issued.
Conclusion - Action
Wage Execution
1. Talk to the employee directly, have the
employee immediately complete part 4 of the wage execution to determine
what the salary would be.
2. Encourage the employee to get assistance from a
tax attorney to resolve the matter. Usually, tax problems are the
result of other financial problems.
3. Withhold the appropriate amounts from the
employee and pay that to the Internal Revenue Service as calculated on
the payment schedule.
Other Levies
1. You do not have to pay the Internal Revenue
Service any disputed amounts or amounts in which you believe are not
owed to the creditor.
2. Do not pay the creditor, rather pay the amounts
due to the Internal Revenue Service.
3. Verify the correct name on the levy. Only pay
the IRS for the creditor named on the levy. Do not pay the IRS if
monies are owed to a creditor with a different name.
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