Can the IRS Really Levy your Commission Checks?

Can the IRS really levy your W2 paycheck or 1099 Real Estate Commission Check?

They can - and will - if you've  been getting IRS notices asking you pay taxes owed, and you fail to comply. 

I've also seen agents and brokers who haven't even filed tax returns get levied by the IRS or their state tax agency -- for 100% of their Commission Income.

I can't think of any worse news than learining your paycheck is 100% frozen. The good news is theirs ways to stop an IRS levy, and I'm going to show you how.

Your employer or broker is required to held a specific percentage of your pay, and send it to the IRS

Your broker typically has one full pay period after receiving a notice of levy to start complying with the order

Unlike a bank levy, which is a momentary event, a wage levy is continous;  it stays in place until the debt is paid off or another solution has been negotiated

How to Stop a Wage Levy

1. The fastest way to stop a levy and get your life back is to pay the tax debt in full. You may not be able to do so, but I'm always surprised how many clients I represent actually have enough money in the bank, their 401K, investment account, or crypto wallet to pay their tax debt in full!
2. The second fastest way is to file an appeal using IRS Form 9423. It's a fairly straightforward process, and temporarily puts a halt to the levy process. If you're able to prove the levy will create severe financial difficulties, the appeal could work long term. (For the IRS, 'severe hardship' would mean the levy prevents you from meeting basi and reasonable living expenses for you and your household.)
3. A great option is to request an Installment Agreement with the IRS or your state tax agency. You'll start making monthly payments, and as long as you keep current with the terms of the IA, you'll be free of future threats of bank or wage levies or seizure of property. 
4. Another option is to submit an Offer in Compromise, where you make an offer to settle your tax debt for less than the full amount owed. The downside to this option is that the levy stays in place until after the offer is accepted by the IRS, and you pay the offer amount. It's a complicated process that I've seen take 8-12 months or more to complete. 

The way to avoid a tax levy is simple: respond to the government! When you get an IRS notice, don't play like an ostrich. Open the letter, read it, and respond. 

As long as you are filing returns and making efforts to resolve your back tax debt, there is no need for the IRS or the state to resort to levying your pay.