You have unpaid taxes, and now the IRS is garnishing your wages. While you know the agency has this authority, you’ve also heard about a 10-year limit on IRS collections. Naturally, you’re left wondering: Does this 10-year rule mean the IRS must eventually stop taking money from your paycheck, or can they continue indefinitely?
This blog tackles that very question. You’ll get a clear explanation of how IRS wage levies work, what the 10-year collection statute means for your earnings, and what circumstances could extend that timeframe.
Keep reading to learn exactly where you stand—and how to safeguard both your rights and your paycheck.
What Is an IRS Wage Levy?
An IRS levy on wages, commonly known as wage garnishment, is a legal procedure that allows the IRS to collect unpaid federal taxes directly from your paychecks.
When a wage levy is implemented, the IRS sends a notice to your employer, who is then legally required to withhold a portion of your paycheck and send it directly to the IRS until your tax debt is paid in full, the levy is released, or the collection statute expires.
| Note →Unlike most creditors, the IRS can garnish wages without a court order. This process begins after the IRS sends you a series of notices and, ultimately, a Final Notice of Intent to Levy, which gives you at least 30 days to respond before garnishment starts. The IRS can take a large part of your paycheck, often leaving you with little for living expenses, and the garnishment continues until the debt is settled or an alternative agreement is made, which can be especially tough if you’re already struggling financially. |
How Long Does an IRS Wage Levy Last?
An IRS levy on wages remains in effect until one of three things happens:
- Your tax debt is paid in full.
- You make other arrangements with the IRS to satisfy the debt, such as setting up a payment plan, proving financial hardship, or settling your debt through an offer in compromise.
- The 10-year collection statute of limitations expires.
The IRS doesn’t have unlimited time to collect unpaid taxes—there are legal restrictions that limit how long it can attempt to recover tax debt.
The 10-Year Collection Statute of Limitations
The Collection Statute Expiration Date (CSED) is the deadline by which the IRS must collect taxes, penalties, and interest from a taxpayer. The standard period is 10 years from the date the tax was assessed, meaning the IRS generally cannot collect after this date unless the statute is suspended or extended by specific events.
Once the IRS collection statute of limitations expires, the IRS loses its legal authority to collect the tax debt. This means the IRS can no longer pursue collection actions such as levies, garnishments, or liens, and the taxpayer is no longer liable for the debt. The expiration date marks the end of the IRS’s ability to enforce payment on that specific tax liability.
Why is the Assessment Date Important?
The assessment date is crucial because it starts the clock on the IRS’s 10-year period to collect unpaid taxes, known as the CSED. The assessment date is typically the date the IRS formally records the tax liability, which is usually the date the tax return is processed or the due date of the return if filed early. If the IRS prepares a substitute for a return or assesses additional tax after an audit, the 10-year period starts on the date of that assessment.
You can find your specific assessment date by requesting a transcript from the IRS, which will show the exact date the assessment was made for each tax year.
Extending the 10-Year Collection Statute of Limitations
While the IRS generally has 10 years to collect your tax debt, several events can pause (suspend) or extend the IRS collection statute, effectively lengthening the period during which the IRS can collect your tax debt. Here are the most common events that impact the CSED:
- Submitting an Offer in Compromise: The collection period is suspended from the date you submit an OIC until the IRS makes a decision and for 30 days after a rejection or withdrawal.
- Requesting a Payment Plan (Installment Agreement): The collection period is suspended while your request for an installment agreement is pending and for 30 days after a rejection or termination. If you appeal the decision, the suspension continues until the appeal is resolved.
- Filing for Innocent Spouse Relief: The collection period is suspended while your innocent spouse claim is pending and for 60 days after a final determination.
- Declaring Bankruptcy: The statute is suspended during the entire bankruptcy proceeding and for an additional 6 months after the case is closed, dismissed, or discharged.
- Requesting a Collection Due Process (CDP) Hearing: The statute is suspended while your CDP hearing request is pending, including any appeals, and if fewer than 90 days remain on the CSED after the final determination, it is extended by 90 days.
- Extended Absence from the U.S.: If you’re outside the U.S. for six (6) consecutive months or longer, the statute is suspended for that period.
Legal Remedies If the IRS Attempts Collection After 10-Year Collection Statute of Limitations
If the IRS attempts to collect a tax debt after the CSED has passed, you have several remedies available:
- Request a Refund: If you made a payment after the CSED expired, you may request a refund of any amount paid after the CSED but before the refund statute expires.
- Challenge the Collection: You can contact the IRS to inform them that the CSED has expired and request that they cease all collection activity. IRS systems are generally programmed to prevent collection after the CSED, but errors can occur.
- Appeal or Dispute: If the IRS continues collection actions, you may file a formal dispute or request a CDP hearing to challenge the legality of the collection.
- Contact the Taxpayer Advocate Service: If you are unable to resolve the issue with the IRS directly, you can seek assistance from the Taxpayer Advocate Service, which helps taxpayers resolve disputes and correct IRS errors.
- Legal Action: In rare cases, if the IRS refuses to stop collections after the CSED, you may need to pursue legal action to enforce your rights and recover any improperly collected funds.
After the CSED has passed, the IRS is legally barred from continuing collection activities for that tax liability. If you are contacted or collection is attempted, it is important to act promptly to protect your rights.
Legal Guidance Matters for IRS Wage Levies
No Matter How Much Time Has Passed!
Concerns about IRS wage levies can arise whether your tax debt is recent or stretches back many years. In some situations, the IRS moves swiftly, while in others, collection issues may unexpectedly resurface long after you believed your tax obligations were resolved. The 10-year collection statute, possible extensions, and specific IRS procedures all influence what actions the IRS can take, both before and after the decade-long mark.
If you are facing an IRS wage levy, reach out to Pelham PLLC for clear answers, robust protection of your rights, and reliable guidance, whether you are located in Washington, D.C., elsewhere in the United States, or are a U.S. taxpayer living abroad.
FAQs
Does the IRS need a court order to garnish wages?
No, the IRS does not need a court order to garnish your wages. Private creditors do, but the IRS can levy wages directly after sending required notices.
How long will the IRS garnish my wages?
The garnishment continues until your tax debt is paid in full, you reach an agreement with the IRS (such as a payment plan or offer in compromise), or the collection statute expires (usually after 10 years from the date the tax was assessed).
How can I stop or reduce IRS wage garnishment?
You can stop or reduce wage garnishment by paying the full amount owed, setting up a payment plan, requesting currently not collectible status, making an offer in compromise, or proving economic hardship.
What notices will I receive before the IRS garnished my wages?
You will receive several notices, including a Final Notice of Intent to Levy (such as LT11 or CP297), at least 30 days before garnishment starts. You have the right to appeal or request a hearing within 30 days of receiving this notice.
What if the garnishment is causing financial hardship?
If the garnishment is causing you to be unable to meet basic living expenses, you can ask the IRS for a hardship release. This does not eliminate your tax debt, but it can stop the garnishment.
