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IRS Updates Instructions for Employee Forms to Figure Wage Levies

BY: APA Staff | 05/11/18

The IRS created new Notice 1439, Figuring the Amount Exempt From Levy on Wages, Salary, and Other Income – Forms 668-W, 668-W(ACS) and 668-W(ICS), May 2018, that updates instructions for the three versions of Form 668-W, Notice of Levy on Wages, Salary, and Other Income. The updated instructions reflect changes made by the Tax Cuts and Jobs Act (Pub. L. 115-97).

To initiate a federal tax levy, the IRS sends an employer Form 668-W, which has six parts. Parts 3-5 require employees to inform the employer and the IRS about their tax filing status and any dependents they can claim. Employees indicate filing status by checking a block on the Statement of Dependents and Filing Status (formerly the Statement of Exemptions and Filing Status). Employees will list each person they can claim as a dependent on an income tax return who is not claimed on another 668-W.

Employees Who Do Not Return Forms

If the employee does not return Parts 3 and 4, the exempt amount is calculated as if the employee had returned them indicating married filing separate with no dependents (zero). Employers should not use the employee’s Form W-4 to determine the amount exempt from levy.

Next Year’s Payments

The amount that is exempt does not change merely because the amount that all taxpayers can deduct for dependents, filing status, and additional standard deductions changes for the new year. An employee may ask to have the exempt amount recalculated with the new year’s table by submitting a new Statement of Dependents and Filing Status. Also, if the employee’s number of dependents or filing status changes while the levy is in effect, the employee should file another Statement of Dependents and Filing Status with the employer.

To learn more about federal and state laws, regulations, and information to keep your company's payroll operations in compliance, check out Payroll Source Plus!