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April 23, 2020
2020-1089

IRS will not automatically release tax levies on wages during the COVID-19 emergency

In its frequently asked questions (FAQs) about mission-critical functions, the IRS states that wage garnishments pursuant to IRS tax levies will not automatically stop during the COVID-19 emergency. Rather, the IRS will determine on a case-by-case basis if the tax levy imposes economic hardship, meaning, the levy prevents the taxpayer from meeting basic, reasonable living expenses. The IRS may request additional financial information when determining if it will temporarily release the taxpayer from a levy.

If employees ask about having their IRS tax levies stop due to COVID-19, employers may want to consider advising them to make the request to the IRS revenue officer working with them, or if there is no revenue officer, to fax the request to +1 855 796 4524. Note that this IRS fax number will only be used to address emergency levy release requests. Due to the current limited staffing at the IRS, the agency will not respond to other issues sent to this fax line.

When submitting a request for release from an IRS tax levy, taxpayers are instructed to include their name, address and Social Security Numbers (for both the employee and spouse if filing jointly). In addition, taxpayers are instructed to include the name, address and fax number of their employer.

For more information about garnishments for IRS tax levies, go here.

Ernst & Young LLP insights

Recently, the U.S. Department of Education instructed employers to stop garnishing wages for federal student loans for at least 60 days, beginning March 13, 2020. There is no specific release required for each qualified student loan garnishment. Rather, the U.S. Department of Education's notice provides a sufficient directive for employers. (See EY Tax Alert 2020-0733 for more information.)

By comparison, employers are not relieved of continuing to honor wage garnishments for IRS tax levies during the COVID-19 emergency. The employer must receive IRS Form 668-D, Release of Levy/Release of Property Levy, to stop making wage deductions pursuant to an IRS tax levy.

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Contact Information
For additional information concerning this Alert, please contact:
 
Workforce Tax Services - Employment Tax Advisory Services
   • Kenneth Hausser (kenneth.hausser@ey.com)
   • Debera Salam (debera.salam@ey.com)
   • Kristie Lowery (kristie.lowery@ey.com)
   • Peter Berard (peter.berard@ey.com)

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