Tax Levies and Wage Garnishments In Ann Arbor, MI

An IRS tax levy is a legal seizure of your property or money to pay a tax debt. A wage garnishment is a specific type of levy that takes a portion of your paycheck each pay period. The IRS can issue levies only after sending a series of required collection notices and giving you a chance to respond.

The IRS follows a specific sequence before it can issue a levy. First, it assesses the tax and sends a Notice and Demand for Payment. If you do not pay, the IRS sends additional collection notices over several months. The final step before levy authority is a “Final Notice of Intent to Levy” (typically Letter 1058 or LT11), sent by certified mail to your last known address.

You have 30 days from the date of this Final Notice to request a Collection Due Process (CDP) hearing. A CDP hearing gives you the right to challenge the proposed levy and present alternative resolution options to an independent IRS Appeals Officer. If you do not request a CDP hearing within that 30-day window, the IRS can begin issuing levies on that tax year at any point going forward until the debt is paid or a resolution is established.

The IRS can levy your wages, bank accounts, retirement plans, Social Security payments, and other property. Each type of levy works differently and requires a different response. Austin & Larson Tax Resolution handles all types of IRS and Michigan state levies for Ann Arbor taxpayers.

Continuous Wage Garnishment (W-2 Employees)

A continuous wage levy is issued to the employer of a W-2 wage earner. Once your employer receives the levy notice, it attaches to your paycheck immediately and stays in effect until the IRS releases it or your balance is paid in full. The IRS calculates an “exempt amount” based on your filing status and number of dependents, and your employer sends everything above that amount to the IRS. For many taxpayers, this leaves barely enough to cover basic living expenses. This levy hits every single paycheck until it is released. It does not expire on its own.

One-Time Levy (Self-Employed and 1099 Workers)

Self-employed individuals face a different type of levy. The IRS sends a one-time levy notice to your customers, contractors, vendors, insurance companies, and anyone else who may owe you money. These third parties are legally required to send the IRS any funds they owe you, up to the amount of the levy, at the time they receive the notice. If you are a contractor working on three projects, the IRS can send a separate levy to each of those clients. Failure to comply can make the third party personally liable for the amount. Unlike a continuous wage levy, a one-time levy captures only funds owed at the moment the notice is received. However, the IRS can issue new one-time levies repeatedly.

IRS Bank Levy

A bank levy is sent to every bank where you have accounts. The levy attaches to any funds in your accounts at the moment the bank receives it. This includes individual accounts, joint accounts, and accounts where you are a signer for minor children. The bank freezes these funds for 21 days, then sends them to the IRS.

That 21-day window is your only realistic chance to negotiate a release. Once the funds are transferred to the IRS, getting them back is extremely difficult and often impossible. If you receive notice that your bank account has been levied, contact Austin & Larson Tax Resolution that same day. We can begin negotiating a release with the IRS while your funds are still frozen at the bank.

Levies on Social Security and Federal Payments

The IRS can also levy federal payments you receive, including Social Security benefits. These levies are generally 15% of your monthly payment, although they can be higher in certain situations. What makes these levies especially dangerous is that they are issued automatically by the IRS computer system. Even if you are actively working with a Revenue Officer who has agreed to pause collection, these automatic levies can still hit your Social Security. Once issued, levies on Social Security payments can take up to 60 days to release through the IRS system.

A Notice of Intent to Levy is the IRS warning you that levies are coming. This is actually a critical window of opportunity. If you act before the levy is issued, you can prevent it entirely instead of trying to undo it after the fact.

When you receive a Final Notice of Intent to Levy (Letter 1058, LT11, or CP504), you have 30 days to request a CDP hearing. During a CDP hearing, an independent IRS Appeals Officer reviews your case and considers alternatives to the levy, such as an installment agreement or Offer in Compromise.

Even if your 30-day CDP window has passed, you can still take action. Contacting Austin & Larson Tax Resolution at any stage gives you a professional representative who can work with the IRS to prevent or release levies. The earlier you call, the more options you have.

If you have received any notice from the IRS mentioning levies, garnishment, or seizure, do not set it aside. Bring it to our Ann Arbor office or call (866) 668-2953 so we can review it immediately.

When you hire Austin & Larson Tax Resolution for tax levies and wage garnishments in Ann Arbor, MI, we move fast. Our team contacts the IRS the same day whenever possible, files your Power of Attorney, and begins working toward a levy release while protecting you from additional collection actions.

Step 1: Same-Day IRS Contact

When you call our office, we assess your situation immediately. If a levy is active, time is critical. We contact the IRS or Michigan Department of Treasury on the same day to notify them that you now have professional representation and to begin the levy release process.

Step 2: File Power of Attorney (Form 2848)

We file IRS Form 2848 so all future communication goes through us. The IRS must stop contacting you directly and work with our team instead. This removes the pressure of dealing with IRS agents on your own.

Step 3: Assess Your Financial Situation

We prepare IRS Form 433-A (Collection Information Statement) using your income, expenses, and assets. This form is the foundation for every resolution option. We prepare it using the IRS allowable expense standards to ensure your living expenses are properly accounted for, which can directly affect whether your levy is released and what payment amount the IRS accepts.

Step 4: File Missing Returns and Establish Compliance

The IRS will not release a levy until you are in full compliance. We prepare and file all outstanding federal and Michigan state returns, claiming every deduction and credit available to reduce your overall balance. We also adjust your current-year withholding or estimated payments so you do not fall out of compliance again.

Step 5: Negotiate Levy Release and Resolution

With your financial picture complete and your returns filed, we negotiate with the IRS to release the levy and establish a permanent resolution on your account. The goal is to stop the levy, prevent future levies, and get you into a resolution you can actually sustain.

The IRS will release a levy once a resolution is established on your account. Austin & Larson Tax Resolution evaluates your financial situation and pursues the resolution that best protects your income and assets.

• IRS Installment Agreement. A monthly payment plan allows you to pay your tax debt over time. Once an installment agreement is in place, the IRS releases active levies and garnishments. We negotiate a payment amount based on what you can actually afford.
• Offer in Compromise. If you qualify, you can settle your tax debt for less than the full balance. Submitting an Offer in Compromise typically pauses collection actions while the IRS reviews your application. Austin & Larson prepares strong Offer applications using accurate financial documentation.
• Currently Non-Collectible Status. If paying any amount toward your tax debt would cause financial hardship, the IRS can place your account in currently non-collectible status. Collection activity stops, levies are released, and the IRS revisits your ability to pay at a later date.
• Penalty Abatement. If penalties have significantly increased your balance, we can request abatement based on reasonable cause. Reducing penalties lowers the total debt, which can make other resolution options more effective.
• Collection Due Process (CDP) Hearing. If you are within the 30-day window after receiving a Final Notice, requesting a CDP hearing prevents the IRS from issuing levies while your case is under review.

How do I stop an IRS wage garnishment on my paycheck?

To stop a wage garnishment, you need to establish a resolution on your tax account with the IRS. This typically requires filing all outstanding tax returns, providing your financial information on Form 433-A, and entering into an installment agreement, Offer in Compromise, or currently non-collectible status. Austin & Larson Tax Resolution handles this entire process on your behalf. We contact the IRS immediately, negotiate the levy release, and work toward a resolution that stops the garnishment and prevents future levies.

Can the IRS take my entire paycheck?

No. The IRS is required to leave you an exempt amount based on your filing status and the number of dependents you claim. However, if you have not provided the IRS with a completed Statement of Exemptions (Form 668-W), they will calculate your exempt amount using the lowest possible rate, which is married filing separately with one personal exemption. For many taxpayers, this leaves very little take-home pay. Filing the proper exemption form with your employer can increase the amount you keep while you work toward a resolution.

How long does it take to get a bank levy released?

When the IRS levies your bank account, the bank freezes your funds for 21 days before sending them to the IRS. During that 21-day window, your representative can negotiate a levy release. After the funds are transferred, getting them back is extremely difficult. This is why immediate action is essential. If your bank account has been levied, call Austin & Larson Tax Resolution the same day. We can begin working on a release while your funds are still at the bank.

Can the IRS garnish my Social Security benefits?

Yes. The IRS can levy up to 15% of your monthly Social Security payments to collect unpaid taxes. These levies are issued automatically by the IRS computer system, which means they can occur even while you are actively negotiating a resolution with the IRS. Once issued, Social Security levies can take up to 60 days to release through the IRS system. Austin & Larson can work to have these levies removed and prevent them from recurring.

What is the difference between a tax levy and a tax lien?

A tax lien is a legal claim the IRS places on your property as security for your tax debt. It does not seize your money or assets, but it does affect your credit and your ability to sell or refinance property. A tax levy is the actual seizure of your property, wages, or bank funds. A lien is a warning. A levy is action. If the IRS has moved from liens to levies, they are actively taking your money, and you need professional help immediately.

Do I need a tax attorney to stop a levy?

You are not required to hire an attorney, but professional representation is strongly recommended. IRS Enrolled Agents, Tax Attorneys, and CPAs are all authorized to represent you before the IRS and negotiate levy releases. The process involves strict deadlines, detailed financial documentation, and knowledge of IRS collection procedures. Austin & Larson Tax Resolution has all three types of professionals on staff, and we match you with the right specialist for your situation.

What if my bank account was levied and the money was already sent to the IRS?

Once the 21-day hold period expires and your bank transfers the funds to the IRS, recovering that money is very difficult. In rare cases, the IRS will return levied funds if you can demonstrate that the levy caused an economic hardship or that the levy was issued in error. However, prevention is far more effective than recovery. If you know you owe back taxes and have received IRS collection notices, contact us before a levy is issued.

Can the IRS levy a joint bank account?

Yes. An IRS bank levy can attach to any account that has your name on it, including joint accounts with a spouse and accounts where you are a signer for minor children. The IRS does not distinguish between your funds and the other account holder’s funds at the time of the levy. If you share accounts with someone who does not owe taxes, they may need to file a claim with the IRS to recover their portion of the seized funds.