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Difference Between Tax Levy and Garnishment

Difference Between Tax Levy and Garnishment

Tax levies and garnishments are both legal actions that command seizure of your assets. Through this WealthHow article, you will understand the difference between tax levy and garnishment.
Buzzle Staff
Did You Know?
  • According to 2013 statistics, 7% of all employees between 35-44 had their wages garnished.
  • 18.3% of garnishments were deducted for tax levies and 4.9% for bankruptcy.

Often, you are faced with a situation wherein your assets are forcibly seized on account of you not paying the taxes (or some other similar reason). Creditors can impose a tax levy if you owe them money and have not paid it even after the stipulated time has expired. On the other hand, a wage garnishment is something like a wage deduction. The two terms are often confused with each other since they are believed to perform the same function, but it is not so. The tax levy vs. garnishment comparison in the paragraphs to follow will give you an idea of the difference between the two.
Tax Levy

  • According to the Federal Law of the United States, when the Internal Revenue Service (IRS) takes an authorized action to seize a property under debt, without going to court, the action is termed 'tax levy'.
  • This is done in order to satisfy the liabilities of tax.
  • This can be levied upon insurance proceeds, account receivables, property payments, social security payments, wages, etc.
  • The IRS also has the powers to levy upon the assets possessed by a third party.
  • Even though this procedure does not include directly going to court, it includes a hearing, and if the taxpayer is unhappy with the decision, he can take the matter to the United States Tax Court.


  • A garnishment is a legal order which says that the property of a third party can be seized in order to satisfy the debt of a person.
  • The term is mostly called 'wage garnishment', because generally, the wages of an employee are deducted by court orders for debt pay off.
  • This is done mostly as apart of the payroll process. And it continues until the debt is completely paid off.
  • The common types of debt include student loans, taxes, child support, etc.

Factors of Differentiation

Tax Levy


Financial operations

You cannot perform any financial operations once a levy has been imposed on you. Your account is frozen and you no longer have access to it. Even if you deposit a check, it will be frozen. This will continue until the creditor is paid with the entire debt.

You can carry on financial operations, certainly, though a percentage of your income will be paid to the creditor. You will never see this money, because the creditor has garnished your wages. This amount is withdrawn before it is deposited or before you receive it.

Finance Targets

Your financial accounts are targeted.

Your wages/salary is targeted.


It is commonly used by the IRS and other Federal agencies, and sometimes, private creditors.

It is mostly used by private creditors.

Court Orders

The IRS or the Department of Education do not require a court order to impose a levy. In other words, a court order may not always be mandatory here.

A court order is required to garnish your wages. Even if the IRS need not have a legal notice, private creditors most certainly require a legal order to impose garnishment proceedings on you.


It is a one-time event.

It takes a considerably longer time.

Things to Remember

  • Whether you have a levy imposed on you or a garnishment, talk to a tax professional or an attorney to evaluate alternative solutions.
  • Garnishment is also a kind of tax levy, for it is a legal way for th IRS to collect your tax liabilities.
  • Before enforcing either of the above, you will be sent the required notices and given a 30-day notice period.
  • Even though the necessity of a court order has been stated as a differentiation point between the two, the truth is that, both cannot be done without legal notices, except may be, in case of child support.
  • Wage garnishment is a nasty collection strategy, however, there are certain settlements using which you can negotiate and compromise.

There are plenty of formalities and other legal conditions involved with both the above terms. An easy way to escape from a tax levy would be to pay back your creditors on time. You can also create a payment plan for debt replacement, if you anticipate such problems in future. For resolving these issues easily, catch hold of a good attorney who will guide you through the complicated legal cornucopia and make the procedure simpler.