Getting a letter from the IRS can turn any normal day into a stressful one — 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’re in Washington State, the rules around wage garnishment work a little differently than in other states — and that can affect both how quickly collections hit and how much the IRS can take.
What Is Wage Garnishment?
Wage garnishment happens when the IRS sends a legal order to your employer requiring them to divert part of your paycheck to the IRS to pay your tax debt.
Unlike other creditors, the IRS doesn’t need to sue you to garnish wages. After sending the proper notices, they can move directly to collection.
How much they take doesn’t depend on a percentage, it’s based on a federal formula that protects only a small portion of your income. Most people feel the impact immediately.
How IRS Collections Escalate: From CP14 to Wage Garnishment
Here’s the typical sequence before the IRS can legally take your wages:
1. CP14: First Notice You Owe
You receive a balance-due notice. Nothing drastic happens yet.
2. Reminder Notices
The IRS sends additional letters showing your growing balance with added interest and penalties.
3. CP504: “Notice of Intent to Levy” (but limited)
This is the first real warning. It tells you:
- The IRS intends to levy
- They can seize state tax refunds
- They will escalate if you do nothing
Important: CP504 does not give the IRS the legal right to garnish wages or seize bank accounts yet. It’s more like: “We’re about to get serious.”
4. LT11 or Letter 1058: Final Notice of Intent to Levy & Notice of Your Right to a Hearing
This is the big one. Once you get an LT11 (or 1058), the IRS is giving you:
- Final notice before wage garnishment or bank levy
- 30 days to respond
- The right to request a Collection Due Process (CDP) hearing
If you do nothing, the IRS is now legally allowed to garnish wages, take funds from your bank account, and seize certain assets.
What Happens After the LT11?
If you don’t respond or set up a payment plan within 30 days, the IRS can:
- Garnish your paycheck
- Levy your bank account
- Take federal payments (e.g., Social Security, vendor payments)
- File a federal tax lien
Once garnishment starts, it continues until:
- The debt is fully paid
- You set up a resolution (installment agreement, hardship status, Offer in Compromise)
- You default on your payment plan
Washington State: What’s Different About Wage Garnishment?
Washington has its own garnishment protections for private creditors, but IRS collections work under federal rules and those rules override state limits.
Here’s what Washington residents should know:
1. IRS Garnishment Is Harsher Than Washington State Garnishment
For normal creditors in WA:
- Only 25% of disposable earnings can be garnished
- And you must be left with at least a minimum weekly amount
For the IRS:
- There is no flat percentage limit
- Instead, the IRS uses a federal exemption table and can take nearly everything above a small protected amount
- State protections do not shield your income from the IRS
This is why IRS garnishments are often financially devastating compared to regular creditor garnishments.
2. Washington Has No State Income Tax, But The IRS Can Still Take State Refunds
CP504 warns that the IRS can seize state tax refunds.
Washington doesn’t have state income tax, but the IRS can still take:
- Certain state-issued payments
- Business & occupation (B&O) tax refunds
- Excise tax credits
- Property tax credits (in limited cases)
Most WA residents don’t deal with state refunds, so CP504 sometimes feels less threatening, but don’t ignore it as it’s still a major warning sign.
3. Community Property Isn’t a Factor Here
Unlike places like California or Texas, Washington is a community property state, but federal IRS enforcement around wages typically targets the person who owes the tax. However:
- Joint bank accounts can be levied
- Joint refunds may be taken (injured spouse relief may help)
- Non-debtor spouse income is usually safe unless accounts are mixed
If you’re married and one spouse has tax debt, separating finances early can prevent messy levy situations.
4. Washington’s High Cost of Living Increases Hardship Eligibility
When requesting IRS hardship (Currently Not Collectible), the IRS uses national and local living cost standards.
Seattle-area housing, utilities, and transportation costs are significantly higher than average, meaning you may qualify for hardship more easily.
Many Washington clients successfully avoid garnishment by demonstrating that IRS collection would cause economic hardship.
How to Stop a Wage Garnishment Before It Starts
You must act before the levy hits your employer’s payroll department. Here are your options once you receive an LT11:
1. Request a CDP Hearing (strong protection)
Stops all collection until the case is reviewed.
2. Set Up an Installment Agreement
Even a modest payment plan stops wage garnishment.
3. Request Currently Not Collectible (Hardship) Status
If you can prove that you cannot afford to pay after covering living costs, the IRS will pause all collection.
4. Submit an Offer in Compromise
If you qualify, you may settle for less, but this takes time.
5. Have a Tax Professional Intervene
A representative can:
- Contact the IRS immediately
- Stop garnishment before it begins
- Negotiate repayment terms
- Request penalty relief
- Ensure you’re protected from enforcement
With a wage garnishment at stake, timing matters more than anything.
Washington Residents: What to Do Right Now if You Received CP504 or LT11
If you received a CP504:
- You still have time
- Contact the IRS or a professional
- A payment plan or IRS communication is often enough to pause escalation
If you received an LT11:
- You have 30 days
- The IRS can garnish wages after that
- Set up a plan or request a hearing immediately
If wage garnishment already started:
- It can be reversed
- A payment plan or hardship request often stops it
- A professional can usually get garnishments released faster
CP504 and LT11 aren’t just routine IRS letters, they’re the final steps before wage garnishment. For Washington residents, understanding how federal rules override state protections is crucial.
The earlier you act, the more options you have. Waiting until after garnishment begins will severely limit your paycheck and strain your financial life.