Wage Levy Release: The Complete Practitioner Procedure under IRC §6343

The IRS's authority to levy on a taxpayer's wages derives from IRC §6331(a), which authorizes the Secretary of the Treasury to collect unpaid tax by levy upon all property and rights to property belonging to the taxpayer (except property specifically exempted under IRC §6334). The procedural prerequisite is articulated at IRC §6331(d): the Secretary must provide written notice of intent to levy at least 30 days before action. For most levy actions, this notice takes the form of a Final Notice of Intent to Levy and Notice of Your Right to a Hearing (Letter 1058 or LT11), which simultaneously triggers CDP rights under IRC §6330.

A wage levy is structurally distinct from other forms of IRS levy. IRC §6331(e) provides that "the effect of a levy on salary or wages payable to or received by a taxpayer shall be continuous from the date such levy is first made until such levy is released under section 6343." This continuous nature distinguishes wage levies from Form 668-A levies on bank accounts, accounts receivable, or other third-party-held property — the latter reach only the property held at the moment of service.

The authority to release a levy is codified at IRC §6343. The statute creates two categories of release authority: (1) the five mandatory release grounds at IRC §6343(a)(1)(A) through (E), under which "the Secretary shall release the levy" upon satisfaction of any one ground; and (2) the salary-and-wages-specific release at IRC §6343(e), under which the Secretary "shall release such levy as soon as practicable" upon agreement that the tax is not collectible.

The procedural overlay is set forth in Internal Revenue Manual (IRM) 5.11.2 (Serving Levies, Releasing Levies, and Returning Property) and IRM 5.11.5 (Levy on Wages, Salary, and Other Income). Current IRM 5.11.2 was last superseded on March 03, 2021, incorporating IRM Procedural Update 23U0651 dated May 23, 2023. Practitioners should verify current IRM revision dates at irs.gov/irm before relying on any cited section.

Upon issuance of Form 668-W (Notice of Levy on Wages, Salary, and Other Income) to the taxpayer's employer, the employer becomes a statutory third-party custodian of the taxpayer's wages above the exempt amount. The employer's obligations are mandatory: failure to comply exposes the employer to personal liability under IRC §6332(d)(1) for the amount that should have been remitted, plus a 50% penalty under IRC §6332(d)(2) for willful non-compliance.

Per IRM 5.11.5.6.1, after service of Form 668-W, the employer is required to wait at least one full pay period before remitting any funds to the IRS. The Notice of Levy includes a Statement of Dependents and Filing Status (Part 3 of Form 668-W) that the employer delivers to the taxpayer. The taxpayer has three business days to complete and return the statement to the employer. The employer then calculates the exempt amount using Publication 1494 (Tables for Figuring Amount Exempt from Levy).

The current exempt amounts are published in Publication 1494 (Rev. 12-2025) for use in tax year 2026. To illustrate: a taxpayer who is married filing jointly, paid bi-weekly, and claims two dependents is allowed $1,646.16 per pay period as exempt. All wages above that figure must be remitted to the IRS. The exempt amount derives from the personal exemption under IRC §151(d), adjusted for the standard deduction and number of pay periods in the calendar year.

In addition to the §6334(a)(9) wage exemption, IRC §6334 lists categories of property that are entirely exempt from levy. Relevant categories include: unemployment benefits (§6334(a)(4)), certain pension and annuity payments (§6334(a)(6)), workers' compensation (§6334(a)(7)), child support payments the taxpayer is required to pay (§6334(a)(8)), and certain public assistance payments including SSI (§6334(a)(11)). Note that OASDI Social Security benefits are not exempt and are routinely subject to the Federal Payment Levy Program at a 15% rate under IRC §6331(h).

A continuous wage levy under IRC §6331(e) terminates only upon one of three events: (1) issuance of Form 668-D (Release of Levy/Release of Property from Levy) under IRC §6343; (2) expiration of the statutory collection period under IRC §6502, generally 10 years from the date of assessment (subject to tolling events); or (3) the taxpayer ceases to be employed by the levied employer.

IRC §6343(e) provides a release ground that applies specifically to salary and wage levies: "In the case of a levy on the salary or wages payable to or received by the taxpayer, upon agreement with the taxpayer that the tax is not collectible, the Secretary shall release such levy as soon as practicable."

This subsection is the statutory underpinning for Currently Not Collectible (CNC) status as a release mechanism distinct from the §6343(a)(1) grounds. The procedural framework is described in IRM 5.16.1 (Currently Not Collectible). To qualify, the taxpayer must demonstrate, through Form 433-A or 433-F supported by current financial substantiation, that their income does not exceed allowable living expenses under current IRS ALE standards. Upon CNC determination, the IRS releases the wage levy under §6343(e) and codes the account with Transaction Code 530.

In Vinatieri v. Commissioner, 133 T.C. 392 (2009), the U.S. Tax Court addressed whether the IRS may condition release of a wage levy creating economic hardship on the taxpayer's filing of all required tax returns. The Settlement Officer in the underlying CDP hearing had acknowledged that the levy was creating economic hardship for Ms. Vinatieri but refused to release it because she had unfiled returns for prior tax years. The Tax Court reversed, holding that the IRS abused its discretion in sustaining the levy.

"Neither section 6343 nor the regulations condition a release of a levy that is creating an economic hardship on the taxpayer's compliance with filing and payment requirements."
— Vinatieri v. Commissioner, 133 T.C. 392, 397 (2009)

The court further reasoned that "a determination in a hardship case to proceed with a levy that must immediately be released is unreasonable and unfair," citing S. Rept. 105-174, at 67 (1998), 1998-3 C.B. 537, 603 (IRS Restructuring and Reform Act of 1998 legislative history on the meaningful-hearing principle).

The Tax Court has subsequently applied the Vinatieri framework in additional decisions: Rehn v. Commissioner, T.C. Memo. 2016-54; Gurule v. Commissioner, T.C. Memo. 2015-61; and Antioco v. Commissioner, T.C. Memo. 2013-35. The doctrine has not been disturbed by subsequent IRS guidance and remains controlling authority for hardship-based wage-levy release in cases involving filing non-compliance.