Form 668-W(ICS), Notice of Levy on Wages: Employer Duties and Penalties

Form 668-W(ICS) is the IRS Notice of Levy on Wages, Salary, and Other Income. It orders an employer to withhold part of an employee’s pay each period and send it to the IRS until the tax debt is paid or the IRS releases the levy.¹ Two clocks start the moment the form is served: the employer generally has one full pay period before the first payment is due to the IRS, and the employee has three working days to return the Statement of Dependents and Filing Status that determines how much of each paycheck is protected.²

Unlike a bank levy, which is a one-time snapshot of the account, a wage levy is continuous. It attaches to every paycheck until the IRS issues a release.¹ It covers wages, salary, bonuses, commissions, fees, and similar income. No court order is required; the authority comes directly from Internal Revenue Code Section 6331 and takes effect as soon as the form is served.³

The Employee’s Three-Day Deadline

The Statement of Dependents and Filing Status arrives inside the levy packet, and it is the employee’s single best tool for keeping money in each paycheck. On it, the employee lists their tax filing status (Single, Married Filing Jointly, Head of Household, etc.), each dependent, and each dependent’s Social Security number. A taxpayer who is over 65 or blind can write in an additional amount to increase the exempt figure.

The completed statement must go back to the employer within three working days.² If it doesn’t, the employer is required to calculate the exempt amount as if the employee were married filing separately with zero dependents. That default produces the smallest protected amount the tables allow, so the IRS ends up taking the largest possible share of every paycheck. Returning the form on time matters even for a single filer with no dependents, because the alternative is a worse calculation than reality.

How the Exempt Amount Is Calculated

Once the employer has the filing status and dependent information, the exempt amount for each pay period comes out of IRS Publication 1494, which the IRS mails with the levy itself.⁴⁵ The tables are organized by pay period (weekly, biweekly, semimonthly, monthly, daily) and cross-referenced by filing status and number of dependents. As an example from the 2026 tables, a single taxpayer paid weekly with three dependents has $615.38 exempt each pay period. The figures come from the standard deduction and a per-dependent allowance under IRC Section 6334.⁶

What Counts as Take-Home Pay

The levy applies to take-home pay, not gross wages. To get to take-home, the employer subtracts federal and state income tax withholding, Social Security tax, Medicare tax, and any court-ordered child support order that predates the levy.⁶ The remaining figure is compared to the Publication 1494 exempt amount. Anything above the exempt amount goes to the IRS. If take-home for a given period is less than the exempt amount, nothing is remitted that period. The math has to be redone every pay period, because hours, overtime, and other pay components shift.

Voluntary Deductions

Existing voluntary deductions such as 401(k) contributions, health insurance premiums, and union dues are generally allowed to continue, because the levy attaches to the employee’s usual take-home pay. The IRS can disallow a voluntary deduction if it is large enough to effectively defeat the levy, and new voluntary deductions started after the levy is served should generally not be honored without IRS approval.²

Remitting Payments to the IRS

Non-exempt funds go to the IRS on the same schedule as the regular paycheck, following the instructions on the levy form.¹ Each payment should include the employee’s name, Social Security number, and the levy reference number so the IRS credits the right account. Payment can be made through the Electronic Federal Tax Payment System (EFTPS) or by check mailed to the address on the form. Keeping a clear record of each payment protects the employer if a later dispute questions how much was collected.

Penalties for an Employer Who Doesn’t Comply

An employer that fails to turn over levied wages becomes personally liable for the amount that should have been surrendered, up to the full tax debt, plus interest at the IRS underpayment rate from the date of the levy.⁷ If the IRS finds no reasonable cause for the failure, a separate penalty of 50 percent of the recoverable amount applies. That 50 percent penalty cannot be credited against the employee’s balance; it is a cost the employer absorbs. An employer who tries to shield an employee from a levy can end up owing more than the employee did.

Getting the Levy Released

Garnishment continues every pay period until the IRS sends Form 668-D, Release of Levy. The employer stops withholding beginning with the next pay period after the release arrives and should keep Form 668-D on file.¹

Full payment of the tax, interest, and penalties triggers an automatic release. The IRS may also release earlier when:

The taxpayer enters an installment agreement or the IRS accepts an offer in compromise.
The IRS determines the levy is causing economic hardship, meaning the taxpayer cannot meet reasonable necessary living expenses. Financial documentation and good faith are required; inflated expenses or hidden assets will disqualify the request.⁸
The ten-year collection statute of limitations has expired. The IRS generally has ten years from the date of assessment to collect, and a levy must be released once that period runs.

An employee who wants a faster release should contact the IRS as soon as the levy arrives. Even a direct-debit installment agreement that shows consistent voluntary payment can be enough to persuade a revenue officer to issue Form 668-D.

Appeal Rights

Before serving a wage levy, the IRS must send a notice of intent to levy at least 30 days in advance. That notice carries the right to request a Collection Due Process (CDP) hearing within the same 30-day window.⁹ A CDP hearing is an independent review by the IRS Office of Appeals, and while it is pending the IRS generally suspends levy actions. In the hearing, the taxpayer can raise:

Whether the IRS followed proper collection procedures.
Collection alternatives such as an installment agreement, offer in compromise, or bond.
Spousal defenses on joint tax debt.
The underlying tax liability, but only if the taxpayer never received a statutory notice of deficiency or another chance to dispute the amount.

If the Appeals decision is unfavorable, the taxpayer can petition the U.S. Tax Court for review.

The Collection Appeals Program (CAP) is a separate track that also covers levies.¹⁰ CAP is faster and less formal than CDP, but it does not suspend the levy while the appeal is under consideration, and it does not preserve the right to go to Tax Court afterward. For a taxpayer still inside the 30-day pre-levy window, CDP is the more protective route. Once a wage levy is already in force, CAP is the remaining administrative option.

When the Employee Leaves the Job

A wage levy cannot attach to paychecks that no longer exist. If the employee quits, is terminated, or otherwise separates, the employer sends the levied amount from the final paycheck, then notifies the IRS that the person is no longer on the payroll, using Part 6 of the form or a written note referencing the levy. The levy itself is not extinguished by the job change; the IRS can serve a new Form 668-W(ICS) on the next employer once it identifies the new wage source.

Other Property the IRS Cannot Touch

The Publication 1494 exempt amount is not the only protection in federal law. Several categories of property are also shielded from IRS levy under IRC Section 6334:⁶

Clothing and schoolbooks necessary for the taxpayer and family.
Fuel, furniture, and personal household effects up to $6,250 in value.
Books and tools of a trade or profession up to $3,125 in value.
Unemployment benefits.
Workers’ compensation.
Wages needed to comply with a pre-existing court-ordered child support obligation.
Service-connected VA disability benefits and certain railroad retirement payments.
Public assistance payments.

These sit alongside the wage exemption rather than replacing it. An employee whose paycheck is being levied still keeps the Publication 1494 amount every period, and property in any of the categories above stays outside the IRS’s reach.

1
Internal Revenue Service. What if I Get a Levy Against One of My Employees, Vendors, Customers or Other Third Parties
2
Internal Revenue Service. IRM 5.11.5 Levy on Wages, Salary, and Other Income
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Office of the Law Revision Counsel. 26 US Code 6331 – Levy and Distraint
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Internal Revenue Service. IRS Publication 1494 – Tables for Figuring Amount Exempt from Levy on Wages, Salary, and Other Income
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Internal Revenue Service. Information About Wage Levies
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Office of the Law Revision Counsel. 26 USC 6334 – Property Exempt from Levy
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Office of the Law Revision Counsel. 26 USC 6332 – Surrender of Property Subject to Levy
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Internal Revenue Service. IRM 5.11.2 Serving Levies, Releasing Levies and Returning Property
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Office of the Law Revision Counsel. 26 US Code 6330 – Notice and Opportunity for Hearing Before Levy
10
Internal Revenue Service. IRM 8.24.1 Collection Appeals Program (CAP)