An IRS ”Notice of Levy on Wages, Salary and Other Income” arrives in your mailbox concerning one of your employees? What do you do?

First, don’t panic.  This is primarily a problem for the employee, whom the IRS has identified as being delinquent in certain tax payments.

But don’t ignore the notice, either.  As the taxpayer’s employer, you have a legal obligation to levy the employee’s wages in accordance with the instructions set forth in the notice.

Ah, the instructions.  They are a bit complicated. So read them carefully.  Then read them again to be certain you know what you’re doing. Basically, though, you need to inform the employee immediately of the notice, give the employee three working days after you receive the notice to claim exemptions, and then calculate the amounts that are exempt from levy using IRS Publication 1494.  Then begin levying the employee’s wages until the IRS sends you a release of levy.  Note that the usual restrictions on the amount of wages that can be garnished do not apply to levies from the IRS or state taxing agencies.

Levying an employee’s wages is a major headache, right?  You bet.  Can you fire the employee for putting you through this?  No, at least not for a one-time levy.  A federal statute, 15 USC 1674 (part of the Consumer Credit Protection Act) provides:  “No employer may discharge any employee by reason of the fact that his earnings have been subjected to garnishment for any one indebtedness.”  So take an Advil, grab your calculator, and let the levying begin.