For wage garnishment purposes, salary or wages includes compensation for services paid in the form of fees, commissions, bonuses and similar items of income.
Unlike other creditors, IRS is not required to get a court judgement in order to garnish your wages. If you have 1099 income, the IRS sends the garnishment notice to your general contractor. If you are a W2 employee, the garnishment notice is sent to your employer. In both the cases, your contractor or employer will hand over part of your paycheck to the government and will pay you the amount that is exempt from garnishment.
If they fail to do so they are subject to 50% penalty on the amount the IRS should have recevied. When you get your paycheck, although part of your hard earned money has been seized by the government, there is nothing your employer can do about it. If you are scheduled to receive a bonus, the IRS may take the entire bonus.
The IRS will keep taking part of your paycheck until:
- tax owed has been fully paid off
- you make other arrangements to pay your tax owed or
- the levy is released.