IRS Wage Garnishment (Business Owner) — Definition Glossary

Defined by Sarah Mitchell, CPA | Reviewed by: James Okafor, EA

Full Definition

IRS wage garnishment (technically a continuous wage levy via Form 668-W) allows the IRS to take a portion of a business owner’s personal salary, distributions, or management fees to satisfy a tax debt. For business owners who receive W-2 wages from their own corporation, the IRS can serve a 668-W on the corporation itself, directing it to withhold and remit the garnished portion. The amount exempt from levy is limited — calculated using the standard deduction and personal exemptions allowed for that year — meaning a high-income business owner can have 70-80% of their take-home pay garnished. Unlike a bank levy (one-time), a wage garnishment is continuous until the debt is satisfied.

Why This Matters for Businesses With Tax Debt

Understanding IRS Wage Garnishment (Business Owner) is essential for any business owner navigating IRS enforcement. This term directly affects the options available for resolving business tax debt — including whether tax debt financing is available, how lien subordination works, and what enforcement the IRS can take.

Related Terms

Notice of Levy, IRS Bank Levy, IRS Form 668-W

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Sources: IRS.gov; Internal Revenue Code (IRC); IRS Publication 594 (The IRS Collection Process); IRS Publication 1 (Your Rights as a Taxpayer). Tax Funds is a financing marketplace — not a lender, CPA firm, or law firm. This content is for informational purposes only.