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What are IRS Series 668 Forms and Which is the Worst?

  • October 4, 2019

(Hint: Wage Garnishment)

IRS Series 668 Forms – 668A, 668D, 668W, 668Y, 668Z – are notices that the IRS sends a taxpayer advising of an action the IRS has initiated against them or the release of such actions. Three are considered "bad" (reprisal action against delinquent taxpayer), while two of them are considered "good" (release of actions).

All of these notices relate to the IRS' ability to legally go after a person's income, contacting their employer, customers, contractors, depending on a person's work situation. And All parties are required to act upon IRS 668 Forms, or possibly incur consequences themselves! This not only puts you and your business dealings in a bad state, but everyone you deal with from a business standpoint as well.

The key takeaway from all this is to take receiving any of these 668 forms as very serious business. The IRS will follow through on any IRS 668 forms they send you. This requires immediate action, and you're best served by hiring a Tax Resolution Specialist like myself, to stop the IRS' actions in its tracks.

Following is a brief description of each notice and the consequences for the taxpayer (with "bad" or "good" noted after each title):

  • Form 668A, Notice of Levy (Accounts) - (bad) - is sent to both individuals and businesses. When the taxpayer files a return without remitting the balance due or the IRS has prepared a substitute for return (SFR) on behalf of the taxpayer, the IRS sends a series of notices to secure payment of the balance due. The final notice of the series gives the taxpayer 30 days to pay or request a hearing. If the taxpayer fails to respond to the final notice and intent to levy, the IRS will seek enforced collection by levy. Taxpayers have 21 calendar days from the date of the letter to respond. This notice applies to the taxpayer’s money or assets held by third parties. Such third parties are then compelled to turn over the taxpayer’s assets to the IRS. Note: while the windows are relatively short, these notices do give a delinquent taxpayer some time to handle their problem, either on their own or with a Tax Resolution Specialist like myself. Since these windows are short by intention, you're better served by someone who can jump right in, knowing exactly what needs to be done upfront, to manage things and slow the process down while the best options are decided upon.
  • Form 668D, Release of Levy/Release of Property from Levy - (good) - is sent to taxpayers who meet one of the terms for release.
  • Form 668W, Notice of Levy on Wages, Salary, or Other Income - (bad) - is issued to a taxpayer advising him that his wages, pension, or other income are subject to a levy. The amount required to be sent to the IRS is determined from a chart provided by the IRS. The levy will remain in place until the taxpayer submits full payment, enters into a payment agreement to address the unpaid balance or provides substantiation of financial hardship.
  • Form 668Y, Notice of Federal Tax Lien - (bad) - is the taxpayer’s copy of the form filed in the local courthouse where the taxpayer lives. The lien protects the interests of the government in the event of the sale of property for priority in a bankruptcy proceeding.
  • Form 668Z, Certificate of Release of Federal Tax Lien - (good) - is provided to the taxpayer upon request when the lien has been satisfied or otherwise released.

The 668 series of forms usually appear on a taxpayer’s credit record and damage the person's credit score. Much of that damage may be alleviated by filing form 12277 requesting a withdrawal once the requirements are met. But until any credit history is adjusted, a person's credit is severely harmed.

The most disruptive and problematic of these forms is Form 668W, Notice of Levy on Wages, Salary, or Other Income, since that hits your immediate ability to pay your bills. 

Let's dive deeper into IRS Form 668W, Notice of Levy on Wages, Salary, or Other Income. Or, more simply, IRS Wage Garnishment:

The IRS has the power to garnish or legally seize any income you make to satisfy federal tax debt or taxes owed. Garnishments can apply to your hourly wages, salary, commissions, and bonuses. The IRS will contact your employer directly and require them to directly send the IRS a portion of your income. Your employer is required by law to comply with the IRS garnishment, typically within one full pay period of receiving the notice from the IRS. The difference between the IRS and most creditors, however, is that the IRS does not need to take you to court to get a judgment in order to garnish your wages, and the IRS can garnish more of your wages than a regular creditor can garnish. To them, you're guilty until you prove yourself innocent! 

As described above, Form 668W, Notice of Levy on Wages, Salary, or Other Income is issued to a taxpayer advising him that his wages, pension, or other income are subject to a levy. The amount required to be sent to the IRS is determined from a chart provided by the IRS. Once issued, after the initial deadline, the levy will remain in place until the debt is resolved to the IRS' satisfaction.

How the IRS Wage Garnishment Process Works

When the IRS seeks to garnish your wages for a tax debt that you owe, or use any other legal means to enforce payment of the taxes that you owe, it will first send you a written notice that sets out the amounts that you owe, including the tax, penalties, and interest. This notice should also provide you with a due date by which you must pay the balances in full. Assuming that you do not pay the balance in full, you will later receive another notice, entitled “Final Notice of Intent to Levy,” Once thirty days have passed from the time you have received the final notice, and you still have failed to pay the balance due, the IRS can then proceed with garnishing your income.

How Much Can the IRS Garnish From Your Wages?

The law places limits on the amount that a regular creditor can garnish from your wages. However, these normal limits do not apply to the IRS. Rather, the tax code requires the IRS to leave you with a certain amount of income after garnishing your wages to pay your tax debt. The tax code contains a table that corresponds to the number of exemptions that you claim for tax purposes, and sets forth the amount that is necessary for you and your family to pay for basic living necessities. Unfortunately, a garnishment by the IRS can amount to 70% or more of your income. This can be appealed (read the next section) but that doesn't help you during the time when they are garnishing your wages while processing your requests or appeals.

Stopping IRS Wage Garnishment

There are a number of different ways in which you can resolve your problem with the IRS. In order to avoid or stop a wage garnishment, you must get back into good standing with the IRS, either by paying your balance in full or entering into a tax payment plan or some other type of resolution. These plans and resolutions include: an Installment Agreement, Offer in Compromise (OIC), earning the status of "Uncollectible Due to Financial Hardship", filing for Bankruptcy, and filing a Tax Levy Appeal. There are other ways around the garnishment, but they are temporary stop-gaps that might buy you a little extra time.

IRS Series 668 Forms are serious business. Your best course of action is to assign your tax problem to me and my Tax Problem Solver Team. Click on this link to schedule a time, or call this number (855) 954-0151, to schedule a strategy session, and let’s see how we can stop IRS Wage Garnishment in its tracks – or any other Series 668 levies. You can also email me at: Larry@TaxProblemSolver.com and we can stop the damage in its tracks.

About the Author Larry Heinkel J.D. LL.M

Larry Heinkel is a tax and bankruptcy attorney with more than 38 years experience helping businesses and individuals, solve their state and federal tax problems. Mr. Heinkel has been extremely successful in representing his clients before IRS and DOR, and is known throughout Florida as an expert in tax problem resolution.

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