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Texas Payroll/Personnel Resource

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Mandatory Deductions
Tax Levies

State agencies and institutions of higher education may receive an Internal Revenue Service (IRS) notice to garnish the salary or wages of a state officer or employee who refuses or neglects to pay federal taxes. This notice is commonly known as a tax levy.

State agencies and institutions must comply with the levy notice by surrendering salary or wages that exceed the exempt amount. See Publication 1494 PDF to determine the exempt amount. The agency or institution must continue the levy until it receives a notification from the IRS to release the levy.

A state employee cannot request to have his or her wages levied voluntarily; the employing agency must be served a notice of levy from the IRS.

State agencies and institutions must treat an IRS levy as a payroll deduction. The IRS is a third-party payee. Before state agency payroll systems can generate payment for a third-party payee, a payee number must be created in the Texas Identification Number System (TINS). A payee number consists of the employee's Texas identification number and a new mail code with payment instructions for the IRS.

To learn more about this payroll deduction, see Chapter 9, “Deductions,” in the USPS Process Guide or the SPRS Deduction Code Table.

Sources

Internal Revenue Code, Sections 6331(a), 6332(a), 6334(d); Treasury Regulations, Section 301.6331-1(a)(4)(ii); Texas Government Code, Section 659.002(d); 34 Texas Administrative Code Section 5.45 (1999).