{"id":7671,"date":"2025-11-16T23:29:08","date_gmt":"2025-11-17T07:29:08","guid":{"rendered":"https:\/\/huddlestontaxcpas.com\/?p=7671"},"modified":"2025-11-18T23:46:38","modified_gmt":"2025-11-19T07:46:38","slug":"wage-garnishment-cp504-and-lt11","status":"publish","type":"post","link":"https:\/\/huddlestontaxcpas.com\/blog\/wage-garnishment-cp504-and-lt11\/","title":{"rendered":"Wage Garnishment, CP504, and LT11: What Washington State Residents Need to Know Before the IRS Takes Action"},"content":{"rendered":"\n<p>Getting a <a href=\"https:\/\/huddlestontaxcpas.com\/blog\/what-a-letter-from-the-irs-means\/\">letter from the IRS<\/a> can turn any normal day into a stressful one &#8212; especially if it hints at <strong>collection action<\/strong>. Two notices in particular, <strong>CP504<\/strong> and <strong>LT11<\/strong> (or Letter 1058), often show up right before the IRS begins wage garnishment or bank levies.<\/p>\n\n\n\n<p>If you\u2019re in <a href=\"https:\/\/huddlestontaxcpas.com\/blog\/washington-state-destination-based-sales-tax\/\">Washington State<\/a>, the rules around wage garnishment work a little differently than in other states \u2014 and that can affect both how quickly collections hit and how much the IRS can take.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What Is Wage Garnishment?<\/strong><\/h2>\n\n\n\n<p><strong>Wage garnishment<\/strong> happens when the IRS sends a legal order to your employer requiring them to divert part of your paycheck to the IRS to <a href=\"https:\/\/huddlestontaxcpas.com\/blog\/what-tax-documents-do-i-need\/\">pay your tax debt<\/a>.<\/p>\n\n\n\n<p>Unlike other creditors, the IRS doesn\u2019t need to sue you to garnish wages. After sending the proper notices, they can move directly to collection.<\/p>\n\n\n\n<p>How much they take doesn\u2019t depend on a percentage, it\u2019s based on a federal formula that protects only a small portion of your income. Most people feel the impact immediately.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>How IRS Collections Escalate: From CP14 to Wage Garnishment<\/strong><\/h2>\n\n\n\n<p>Here\u2019s the typical sequence before the IRS can legally take your wages:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>1. CP14: First Notice You Owe<\/strong><\/h3>\n\n\n\n<p>You receive a <a href=\"https:\/\/huddlestontaxcpas.com\/blog\/understanding-irs-notice-cp14\/\">balance-due notice<\/a>. Nothing drastic happens yet.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>2. Reminder Notices<\/strong><\/h3>\n\n\n\n<p>The IRS sends additional letters showing your growing balance with added interest and penalties.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>3. CP504: \u201cNotice of Intent to Levy\u201d (but limited)<\/strong><\/h3>\n\n\n\n<p>This is the first real warning. It tells you:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The IRS <em>intends to levy<\/em><\/li>\n\n\n\n<li>They can seize <strong>state tax refunds<\/strong><\/li>\n\n\n\n<li>They will escalate if you do nothing<\/li>\n<\/ul>\n\n\n\n<p><strong>Important:<\/strong> CP504 does <strong>not<\/strong> give the IRS the legal right to garnish wages or seize bank accounts <em>yet<\/em>. It\u2019s more like: \u201cWe\u2019re about to get serious.\u201d<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>4. LT11 or Letter 1058: Final Notice of Intent to Levy &amp; Notice of Your Right to a Hearing<\/strong><\/h3>\n\n\n\n<p>This is the big one. Once you get an <strong>LT11<\/strong> (or 1058), the IRS is giving you:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Final notice before wage garnishment or bank levy<\/li>\n\n\n\n<li>30 days to respond<\/li>\n\n\n\n<li>The right to request a <strong>Collection Due Process (CDP) hearing<\/strong><\/li>\n<\/ul>\n\n\n\n<p>If you do nothing, the IRS is now legally allowed to garnish wages, take funds from your bank account, and seize certain assets.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What Happens After the LT11?<\/strong><\/h2>\n\n\n\n<p>If you don\u2019t respond or set up a payment plan within 30 days, the IRS can:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Garnish your paycheck<\/li>\n\n\n\n<li>Levy your bank account<\/li>\n\n\n\n<li>Take federal payments (e.g., Social Security, vendor payments)<\/li>\n\n\n\n<li>File a federal tax lien<\/li>\n<\/ul>\n\n\n\n<p>Once garnishment starts, it continues until:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The debt is fully paid<\/li>\n\n\n\n<li>You set up a resolution (installment agreement, hardship status, Offer in Compromise)<\/li>\n\n\n\n<li>You default on your payment plan<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Washington State: What\u2019s Different About Wage Garnishment?<\/strong><\/h2>\n\n\n\n<p>Washington has its own garnishment protections for <strong>private creditors<\/strong>, but IRS collections work under federal rules and those rules override state limits.<\/p>\n\n\n\n<p>Here\u2019s what Washington residents should know:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>1. IRS Garnishment Is Harsher Than Washington State Garnishment<\/strong><\/h3>\n\n\n\n<p>For normal creditors in WA:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Only <strong>25% of disposable earnings<\/strong> can be garnished<\/li>\n\n\n\n<li>And you must be left with at least a minimum weekly amount<\/li>\n<\/ul>\n\n\n\n<p>For the IRS:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>There is <strong>no flat percentage limit<\/strong><\/li>\n\n\n\n<li>Instead, the IRS uses a federal exemption table and can take nearly everything above a small protected amount<\/li>\n\n\n\n<li>State protections do <strong>not<\/strong> shield your income from the IRS<\/li>\n<\/ul>\n\n\n\n<p>This is why IRS garnishments are often financially devastating compared to regular creditor garnishments.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>2. Washington Has No State Income Tax, But The IRS Can Still Take State Refunds<\/strong><\/h3>\n\n\n\n<p>CP504 warns that the IRS can seize <strong>state tax refunds<\/strong>.<\/p>\n\n\n\n<p>Washington doesn\u2019t have state income tax, but the IRS <em>can<\/em> still take:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Certain state-issued payments<\/li>\n\n\n\n<li>Business &amp; occupation (B&amp;O) tax refunds<\/li>\n\n\n\n<li>Excise tax credits<\/li>\n\n\n\n<li>Property tax credits (in limited cases)<\/li>\n<\/ul>\n\n\n\n<p>Most WA residents don\u2019t deal with state refunds, so CP504 sometimes feels less threatening, but don\u2019t ignore it as it\u2019s still a major warning sign.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>3. Community Property Isn\u2019t a Factor Here<\/strong><\/h3>\n\n\n\n<p>Unlike places like California or Texas, <a href=\"https:\/\/huddlestontaxcpas.com\/blog\/king-county-property-taxes-pricing-people-out-of-their-homes\/\">Washington <strong>is<\/strong> a community property state<\/a>, but federal IRS enforcement around wages typically targets the person who owes the tax. However:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Joint bank accounts <em>can<\/em> be levied<\/li>\n\n\n\n<li>Joint refunds may be taken (<a href=\"https:\/\/huddlestontaxcpas.com\/blog\/how-to-decide-if-you-and-your-spouse-should-file-separately-or-jointly\/\">injured spouse relief<\/a> may help)<\/li>\n\n\n\n<li>Non-debtor spouse income is usually safe unless accounts are mixed<\/li>\n<\/ul>\n\n\n\n<p>If you\u2019re married and <a href=\"https:\/\/huddlestontaxcpas.com\/blog\/hidden-tax-debt-guide-for-families\/\">one spouse has tax debt<\/a>, separating finances early can prevent messy levy situations.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>4. Washington\u2019s High Cost of Living Increases Hardship Eligibility<\/strong><\/h3>\n\n\n\n<p>When requesting IRS hardship (Currently Not Collectible), the IRS uses national and local living cost standards.<br>Seattle-area housing, utilities, and transportation costs are <strong>significantly higher<\/strong> than average, meaning you may qualify for hardship more easily.<\/p>\n\n\n\n<p>Many Washington clients successfully avoid garnishment by demonstrating that IRS collection would cause <a href=\"https:\/\/huddlestontaxcpas.com\/blog\/how-to-survive-an-economic-downturn\/\">economic hardship<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>How to Stop a Wage Garnishment Before It Starts<\/strong><\/h2>\n\n\n\n<p>You must act <strong>before<\/strong> the levy hits your <a href=\"https:\/\/huddlestontaxcpas.com\/payroll-services\/\">employer\u2019s payroll<\/a> department. Here are your options once you receive an LT11:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>1. Request a CDP Hearing (strong protection)<\/strong><\/h3>\n\n\n\n<p>Stops all collection until the case is reviewed.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>2. Set Up an Installment Agreement<\/strong><\/h3>\n\n\n\n<p>Even a <a href=\"https:\/\/huddlestontaxcpas.com\/blog\/payment-installment-plans\/\">modest payment plan<\/a> stops wage garnishment.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>3. Request Currently Not Collectible (Hardship) Status<\/strong><\/h3>\n\n\n\n<p>If you can prove that you cannot afford to pay after covering living costs, the IRS will pause all collection.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>4. Submit an Offer in Compromise<\/strong><\/h3>\n\n\n\n<p><a href=\"https:\/\/huddlestontaxcpas.com\/accounting-services\/offer-in-compromise\/\">If you qualify<\/a>, you may settle for less, but this takes time.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>5. Have a Tax Professional Intervene<\/strong><\/h3>\n\n\n\n<p>A representative can:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Contact the IRS immediately<\/li>\n\n\n\n<li>Stop garnishment before it begins<\/li>\n\n\n\n<li>Negotiate repayment terms<\/li>\n\n\n\n<li>Request penalty relief<\/li>\n\n\n\n<li>Ensure you\u2019re protected from enforcement<\/li>\n<\/ul>\n\n\n\n<p>With a wage garnishment at stake, timing matters more than anything.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Washington Residents: What to Do Right Now if You Received CP504 or LT11<\/strong><\/h2>\n\n\n\n<p>If you received a CP504:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You still have time<\/li>\n\n\n\n<li>Contact the IRS or a professional<\/li>\n\n\n\n<li>A payment plan or IRS communication is often enough to pause escalation<\/li>\n<\/ul>\n\n\n\n<p>If you received an LT11:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You have <strong>30 days<\/strong><\/li>\n\n\n\n<li>The IRS can garnish wages after that<\/li>\n\n\n\n<li>Set up a plan or request a hearing immediately<\/li>\n<\/ul>\n\n\n\n<p>If wage garnishment already started:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>It can be reversed<\/li>\n\n\n\n<li>A payment plan or hardship request often stops it<\/li>\n\n\n\n<li>A professional can usually get garnishments released faster<\/li>\n<\/ul>\n\n\n\n<p>CP504 and LT11 aren\u2019t just routine IRS letters, they\u2019re the final steps before wage garnishment. For Washington residents, understanding how federal rules override state protections is crucial.<\/p>\n\n\n\n<p>The earlier you act, the more options you have. Waiting until after garnishment begins will severely limit your paycheck and strain your financial life.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Getting a letter from the IRS can turn any normal day into a stressful one &#8212; especially if it hints at collection action. Two notices in particular, CP504 and LT11 (or Letter 1058), often show up right before the IRS begins wage garnishment or bank levies. If you\u2019re in Washington State, the rules around wage [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":7672,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-7671","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-uncategorized","8":"entry"},"_links":{"self":[{"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/posts\/7671","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/comments?post=7671"}],"version-history":[{"count":1,"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/posts\/7671\/revisions"}],"predecessor-version":[{"id":7673,"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/posts\/7671\/revisions\/7673"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/media\/7672"}],"wp:attachment":[{"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/media?parent=7671"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/categories?post=7671"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/huddlestontaxcpas.com\/wp-json\/wp\/v2\/tags?post=7671"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}