What is a Form 668 Notice Letter from the IRS?
If you have received a 668 Notice Letter from the IRS, the most likely scenario is that you are a business owner and are being notified of a wage levy (sometimes called a wage garnishment) - or you are an employee of the business being notified. The IRS has requested payment on business taxes and has not receive payment or a response. Now they are moving to levy your property – specifically wages, salaries, severance, back pay, commissions or similar items – in this case. Sometimes, retirement and benefit income can be levied as well. A common type is the Form 668-W.
Is Form 688 a Final Notice?
Yes. If you are receiving Form 688-W, a Letter CP504 - intent to levy - has already been sent. You may have also received a Letter 3174, New Warning Enforcement, or a “reminder” – these are sent when an actual Revenue Officer is involved (versus being generated from Automated Collection Service).
Levies are a tactic for the IRS to recover debt. Wages and salaries are relatively easy to go after, so the IRS often starts with these. The 688 is the final step before the IRS starts legally seizing wages to pay a tax debt.
How Long Do I Have After I receive a 688 Notice Letter?
There is typically a 21-day waiting period for a bank, credit union or similar account to comply with the levy. This allows the taxpayer time to contact the IRS. There is usually at least one pay-period before wage garnishments are taken from every paycheck. This can be a large amount, sometimes 90%, which is a significant loss of income and can make it difficult to live on. Act to resolve the levy with the IRS quickly.
Employers can pay employees any amounts exempt from levy – this can be calculated using Publication 1494:
Levies are continuous until they are released (an exception to this is Form 668-A, which is a one-time levy).
How Do I Secure the Release of a Levy?
- Contact the IRS if you believe the levy was placed in error. Sometimes the IRS makes mistakes.
- Pay the debt in full. The is the best and cleanest way to resolve this if you agree that the amount is owed, and you have the funds.
- Enter a payment plan (sometimes called an installment plan). This is when you agree to pay the IRS the total amount but break it up into smaller payments over a set period of time. A good option if you don’t have the total amount of funds available right now.
- File for bankruptcy. This will stop the levy immediately – but be careful, the IRS might renew the collection process afterwards.
In most scenarios, you will need to fill out Form 433-A or Form 433-F. These are disclosures from your financial statements and any other supporting documents that outline income, assets, expenses, liabilities, etc. These need to be completed and sent back to the IRS as soon as possible.
Here is an example of Form 433-A:
Here is an example of Form 433-F:
I’m overwhelmed, I’m not a tax person, what do I do right now?
It’s critical to act to resolve this as quickly as possible. Do not ignore the notice. Do not delay in responding. Time is of the essence if you’ve received a Form 688 – this is a final notice. It will not just go away by not dealing with it.
If you need help assessing your options and/or navigating next steps, Safe Harbor is here and ready to help if you need it. We have attorneys, CPAs and business owners – this combination allows us to both help resolve your immediate tax situation and represent you to the IRS. We’re standing by, please feel free to contact us below.