Form 668-W Wage Levy on a Federal Employee: Exempt Amounts and Release

The FPLP takes 15%. A paper wage levy takes far more. If a revenue officer has served Form 668-W, Notice of Levy on Wages, Salary, and Other Income, on your federal agency or on DFAS, most of your paycheck can be going to the IRS. This is the most urgent levy situation a federal or military family faces. Here is how it works.

The authority

IRC 6331(a) authorizes levy on "the accrued salary or wages of any officer, employee, or elected official, of the United States" by serving notice on the employer. IRM 5.11.6.5 confirms that federal civilian employees and military personnel can be levied. IRM 5.1.7.8.3.2 says Form 668-W can be issued for federal employees and also has a continuing effect on the salary of National Guard members and reservists.

IRC 6331(e) makes a wage levy continuous "from the date such levy is first made until such levy is released under section 6343." It does not expire on its own and it does not stop at one paycheck.

How much you keep

IRC 6334(a)(9) exempts a minimum amount of wages. Section 6334(d) sets the formula: generally, your standard deduction plus an amount for each dependent, divided by 52 for a weekly amount and adjusted for your pay period. The IRS publishes tables in Publication 1494, updated for each year. Use the version for the year the levy is in effect.

The exemption depends on information you provide. Section 6334(d)(4)(D) says that unless you submit a written, properly verified statement of the facts, the exempt amount is figured as if you were married filing separately with no dependents. That default is low. The levy package includes a statement of exemptions and filing status. Fill it out and return it promptly so the correct amount is protected.

Other protections can apply on top:

• Child support. IRC 6334(a)(8) protects amounts needed to comply with a court order for child support entered before the levy.
• Service-connected disability. IRC 6334(a)(10) protects VA service-connected disability benefits. See VA disability and IRS levies.

The default exemption assumes you are single in all but name, with no kids. Send the statement.

You cannot outrun it with payroll changes

IRM 5.11.6.5 says that if a taxpayer increases voluntary deductions after a levy is served, the IRS tells the employer this is not allowed, citing a Comptroller General decision addressed to federal payroll offices. Do not try to shelter wages by raising your TSP contribution or adding allotments after the levy. It will not work and it will not help your credibility.

Paper levy versus FPLP

For civilian federal salaries, the IRS can use the 15% FPLP or a paper levy, not both on the same payment. IRM 5.1.7.8.3.2 says the FPLP must be blocked or released before a paper levy or payroll deduction agreement is served on the agency. If a paper levy follows an FPLP levy, the revenue officer has decided 15% is not enough. That usually means the IRS thinks you can pay more and has not received a proposal it can accept. See FPLP levies on federal salary.

Military specifics

For active duty pay, there is no FPLP option; the IRS uses Form 668-W. A levy follows you through PCS moves, and the IRS waits 40 days after the final notice for members stationed outside the case area. No levy is allowed while you are in a combat zone or have an approved SCRA deferment. See levies on active duty pay.

What your payroll office must do

Your agency's payroll office is not free to ignore the levy or to cut you a break. IRC 6332(d)(1) makes a person who fails or refuses to surrender property subject to levy personally liable for the amount not surrendered. Payroll will honor the levy until it receives a release from the IRS. Talking to HR will not stop it. Talking to the IRS, with a proposal, will.

Getting it released

IRC 6343(a)(1) requires release when the liability is satisfied or unenforceable, when you enter an installment agreement, when the levy is creating an economic hardship, or when release will facilitate collection. IRC 6343(e) requires release of a wage levy "as soon as practicable" once the IRS agrees a balance is not collectible.

What usually works:

1. File any missing returns. Revenue officers rarely release a levy for someone who is not filing.
2. Submit a financial statement. Form 433-A or 433-F with proof of income and expenses.
3. Propose a payment. A payroll deduction agreement is a natural fit for federal employees. See installment agreements.
4. Or prove hardship. Under Treas. Reg. 301.6343-1(b)(4), hardship means the levy leaves you unable to pay reasonable basic living expenses.
5. Use your appeal rights. If the IRS will not release the levy, the Collection Appeals Program and the Taxpayer Advocate Service are options. A Collection Due Process hearing may still be available if you are within the period on your final notice.

Money taken after you resolved it

Payroll cycles do not always line up with IRS releases. IRC 6343(d) allows return of levied property when you have entered an installment agreement, when the levy was premature or not in accordance with procedures, or when return would facilitate collection. Ask for it.

Workplace consequences

A paper wage levy is served on your agency's payroll office. That makes it visible in a way the FPLP may not be. Under 5 CFR 2635.809, federal employees must satisfy just financial obligations, especially taxes, in good faith. Showing a resolution in place is your best answer to any workplace question. See federal ethics rules and tax debt.

A 668-W is serious, but it is also the IRS telling you exactly what it wants: a filed return and a real proposal. Give it that, and the levy has no reason to stay.