Regarding a federal tax levy, which statement is true?

Regarding a federal tax levy, which statement is true?

• A. It does not have to be honored if any other garnishments have been served
• B. It requires a new order for each pay period
• C. It is limited only by the amount of the employee's net pay
• D. It is continued each pay period until a release of levy is received

Answer: (D)

A federal tax levy is an IRS instruction to withhold a portion of an employee’s wages to satisfy unpaid taxes, and once served it stays in effect across multiple pay periods until the IRS releases it. You don’t issue a new levy order for each pay period—the same order covers successive paychecks until it’s released. This withholding typically takes priority over other garnishments, and you must honor it even if other garnishments are in place. It isn’t merely limited to the employee’s net pay; the amount to withhold is set by the levy and applicable tax law, which can require withholding beyond simple net pay than would be taken under ordinary garnishment rules. So the statement that the levy continues each pay period until a release is received is correct.

A federal tax levy is an IRS instruction to withhold a portion of an employee’s wages to satisfy unpaid taxes, and once served it stays in effect across multiple pay periods until the IRS releases it. You don’t issue a new levy order for each pay period—the same order covers successive paychecks until it’s released. This withholding typically takes priority over other garnishments, and you must honor it even if other garnishments are in place. It isn’t merely limited to the employee’s net pay; the amount to withhold is set by the levy and applicable tax law, which can require withholding beyond simple net pay than would be taken under ordinary garnishment rules. So the statement that the levy continues each pay period until a release is received is correct.