The IRS Garnished Your Client’s Paycheck: A Strategic Guide for Tax Professionals

You'll come to realize that many clients won't even mention they owe tax debt until the IRS is already dipping its paws into their paycheck.

The dreaded wage garnishment.

A wage garnishment is a way for the IRS to directly take a taxpayer's money from their paycheck to pay back IRS tax debt. It's not like credit card debt or owing money to any old third party. The IRS has full authority under federal law to garnish wages, even without a court judgment.

A wage garnishment is also different than a bank levy.

First, a wage garnishment is continuous. If you fail to take action, the IRS will continue to deduct money from your paycheck until you settle the debt. Second, unlike a bank levy, where you have 21 days to convince the IRS to release the levied money back into your account, with a wage garnishment, once it's gone, it's gone.

You can only hope to stop it from happening again.

Why This Matters

Clients don’t always know who to call when the garnishment happens.

They might reach out to their tax preparer, bookkeeper, financial advisor, or even a family law attorney in the middle of a divorce case. And when they do, that professional becomes the first responder.

Here’s what you need to know to be ready for that moment.

1. Request a Collection Appeal Program (CAP) Hearing

The CAP Request is a fast-track ticket to have another set of eyes determine whether the garnishment should continue. A CAP hearing is set quickly, unlike a Collection Due Process hearing, which can take time and requires waiting for specific notices before it can be requested.

A CAP hearing is designed to challenge the IRS’s collection action, not the underlying debt itself. The IRS typically reviews the appeal quickly and can halt the garnishment before further damage is done. It’s a highly effective move—especially when the levy is unfair or premature, but also if you can prove economic hardship to want to negotiate a payment plan.

2. Negotiate a Payment Plan (Installment Agreement)

Once your client gets into a formal installment agreement—and they’re compliant with current filings—the garnishment will stop. The key here is structure: different types of plans (streamlined, partial pay, etc.) can lead to drastically different outcomes. But once the IRS formally agrees to an installment agreement, the garnishment is released.

3. Prove Financial Hardship

Proving economic hardship is all about showing the IRS that garnishing wages is making a bad situation worse.

If your client’s financial situation is dire enough, the IRS can place them in "Currently Not Collectible" status. A CNC will halt collection efforts—garnishments, levies, property seizures—without requiring the taxpayer to make payments to the IRS.

Both the facts and the narrative are key. If you can show that your client won't be able to pay household bills due to the wage garnishment and you can substantiate it, a currently not collectible determination is on the table.

4. Understand What the IRS Can Take

Unlike private creditors who are limited to 25% (or 30 times the amount of minimum wage), IRS wage garnishments depend on the taxpayer's filing status, the number of dependents, and how often they get paid. They use Publication 1494 to calculate how much a taxpayer keeps based on marital status, dependents, and pay frequency.

Everything above that line? The IRS takes.

By way of example, in 2024, a single person with two dependents who earns $1,000 weekly only keeps $473.07.

The rest? Gone.

TL;DR – What to Know

A wage garnishment isn't a one-time deal - if you don't act, the IRS will continue to take money from your client's paycheck until the tax is paid in full.

⏩ A CAP appeals hearing can stop collection quickly—no formal notice is required.

⏩ A well-structured payment plan will release a garnishment.

⏩ If the levy causes financial hardship, the IRS may pause collection entirely.

⏩ Garnishment amounts are based on exemptions tied to status, dependents, and income.

Let's Talk...

➤ Has your client had their paycheck garnished?

➤ What were the circumstances? And how did it get resolved?