If you work on a 1099, you may think a wage levy is a W-2 problem. It is not that simple. The IRS can levy the businesses that pay you. The question is whether that levy keeps reaching future payments, the way a wage levy does, or only grabs what is owed on the day it is served.
Wages, salary and “other income”
Form 668-W is titled Notice of Levy on Wages, Salary, and Other Income. IRM 5.11.2 describes “other income” as income generally owed the taxpayer as the result of personal services in a work relationship. IRM 5.11.5.1.1 says salary or wages includes compensation for services paid in the form of fees, commissions, bonuses and similar items.
That is broader than a W-2 paycheck. Fees and commissions for services can be “salary or wages” for levy purposes, and IRC 6331(e) makes a levy on salary or wages continuous until released.
Continuous or one-time?
Here is the key distinction. IRC 6331(b) says that, except for the continuous wage levy, a levy extends only to property possessed and obligations existing at the time of the levy. IRM 5.11.5.3 puts it in practical terms: except for levies on certain specified payments, all other levies only attach to property and rights to property that exist when the levy is served.
For “other income,” IRM 5.11.5.3 adds a test. The levy reaches a payment the taxpayer has a fixed and determinable right to. If the taxpayer’s right to that payment does not depend on performing future services, the levy reaches future payments too.
The IRM’s own example is an author. A levy on the author’s royalties reaches future royalties from books already published, because the author has a fixed right to them. It does not reach royalties on books written and published later. A new levy is needed for those.
So for a contractor, the answer depends on the nature of the payments:
- Payments that are compensation for services in a continuing work relationship, such as regular fees or commissions, can be treated as salary or wages, and the levy is continuous. IRM 5.11.5.3 tells IRS employees to use Form 668-W on a real estate brokerage to capture agents’ commissions for that reason.
- A levy on a customer who owes you for a finished job reaches what is owed at the time. Work you perform after the levy may require a new levy, depending on how the relationship and payments are structured.
The line between these is fact-specific. Do not assume a levy on a client is a one-time hit until you know how the IRS characterized it and what the client is doing in response.
The exemption for contractors
The minimum exemption in IRC 6334(a)(9) covers amounts payable to or received by an individual “as wages or salary for personal services, or as income derived from other sources.” Treasury Regulation 301.6334-3(d)(3) explains how to compute it when payments are not on an established pay schedule: multiply the weekly exempt amount by the number of full weeks, up to 52, to which the payment is attributable.
The regulation’s example fits contract work perfectly. A worker with a $100 weekly exempt amount is paid a $1,500 flat fee for a task completed in 10 weeks. $1,000 is exempt. $500 goes to the levy. For 2026, a single filer’s weekly exempt amount under Publication 1494 (Rev. 12-2025) is $309.62, so a payment covering 10 weeks of work would carry up to $3,096.20 of exemption, assuming no other exemption was received for those weeks.
To claim it, you need the statement that comes with Form 668-W, and you need to show what period the payment covers. Invoices, contracts and time records are your proof. See the statement guide.
Multiple clients
Contractors usually have several payers. Treasury Regulation 301.6334-2(c) lets the IRS levy some sources and leave others alone. If the unlevied income equals or exceeds your exempt amount, the IRS can tell a levied payer to allow no exemption. IRM 5.11.5.4.4 describes using Letter 1697 for that. See wage levies with two jobs, because the same logic applies to two clients.
Business accounts and receivables
Contractors often see a levy on a business bank account at the same time. That is a different levy with different rules. A bank levy generally reaches only what is in the account when it is served, and IRC 6332(c) requires the bank to hold deposits for 21 days before surrendering them. Compare the two in wage levy versus bank levy.
Gig work through an app
Rideshare drivers, delivery drivers and other gig workers are usually paid by a platform company. The same principles apply. The IRS can serve a levy on the company that pays you. Whether the levy reaches future payouts depends on whether those payouts are treated as compensation for services under the levy rules and on the terms of your relationship with the platform. Expect the platform to follow the levy as written and to tell you very little about it, so call the IRS office on the levy if you need details.
Your necessary business costs matter here. Fuel, insurance, maintenance and phone service are what produce the income. Treasury Regulation 301.6343-1(b)(4)(ii)(B) lists expenses necessary to the taxpayer’s production of income among the items the IRS considers in a hardship analysis. A levy that takes the money you need for gas to keep earning is a hardship argument worth making with documentation.
What contractors should do
- Find out which payers received a levy and what form it was on.
- Return the exemption statement to the payer that received Form 668-W, and document what period each payment covers.
- Stay current on estimated taxes. IRM 5.14.5.2 requires individual taxpayers to be current with estimated tax payments before an installment agreement is granted. Contractors who are not making estimated payments cannot get a payment plan.
- Prepare a financial statement that shows business income and necessary business expenses. Treasury Regulation 301.6343-1(b)(4) counts expenses necessary to the production of income in a hardship analysis.
- Request release on the ground that fits: an installment agreement, economic hardship, or a partial release.
For a short take from my firm’s main site on this question, read will the IRS levy 1099 pay.
No W-2 does not mean no wage levy. It means the details of each payment matter more.