Our HOA got an IRS levy or a writ of garnishment for money we owe a vendor. What does the board do?

By OurHOA · General information · Revised November 10, 2026

HOA served an IRS levy or writ of garnishment for a vendor's debt? What to hold, when to answer, and how the treasurer avoids paying the same bill twice.

Part of the HOA board handbook: treasurer and money.

The short answer

When an IRS levy or a court writ of garnishment names someone the association owes money to, the association is now holding that person's money for their creditor. Stop paying the vendor on whatever the HOA owed on the day the paper was served, answer by the deadline printed on it, and release the money only to the IRS or as the court orders. If the treasurer pays the vendor anyway, the HOA can end up paying the same invoice twice. Most self-managed associations rarely see one. When it happens, it is usually over a landscaper, pool service or handyman who owes back taxes or lost a lawsuit. The rules depend on who issued the paper and on state law, so read this as general education, not legal advice. If anyone plans to contest the writ, or the amounts are large, bring in the association's attorney before the answer date.

Figure out what you were served

Write the date and time of receipt on the first page before doing anything else. Several deadlines run from that moment. Then identify the document. An IRS Form 668-A is a levy on property other than wages, and the IRS uses it for business receivables, which is what an unpaid invoice is. A Form 668-W is a wage levy and only matters if the vendor is actually on the association's payroll. A court writ of garnishment names a court, a plaintiff (the creditor), a defendant (your vendor) and the association as garnishee. State tax agencies issue their own levies too; follow the instructions printed on them. Confirm the name matches. Compare the debtor's name and any taxpayer number on the paper with the W-9 in the vendor file. A sole proprietor often invoices under a trade name, so "Green Acres Lawn" on your invoices and "Robert Diaz" on the levy may be the same person. If you cannot tell, ask the IRS contact or the creditor's attorney listed on the paper rather than guessing.

Work out what the HOA owed on the date of service

The freeze covers money the association owed the vendor when the paper was served. How far it reaches depends on the type of paper. IRS levies. Under 26 U.S.C. 6331(b), a levy extends only to property possessed and obligations existing at the time of the levy. Unpaid invoices for work already done are caught. Work the vendor does next month is not, although the IRS can serve another levy and often does. Wage levies are the exception: section 6331(e) makes them continuous until released. Texas writs. Texas Civil Practice and Remedies Code section 63.003 says that after service the garnishee may not pay any debt to the defendant, and any payment made in violation is void as to the amount needed to satisfy the creditor. Florida writs. Florida Statutes section 77.06 makes the garnishee liable for debts due at service and for the defendant's property it holds at any time between service and its answer. A worked example. A writ is served on March 3. The landscaper's February invoice of $1,850 is unpaid and the check has not been mailed. That $1,850 is frozen. A check mailed on February 28 that cleared before March 3 is not, but say so in the answer. Then do the mechanical part the same day: mark the vendor on hold in the books, cancel any scheduled bill pay or autopay, void unmailed checks and tell every check signer.

Answer on time, even if you owe nothing

The answer is the association's sworn statement of what it owed and holds. Skipping it is the expensive mistake. IRS levy. The IRS tells third parties to turn over property they hold that belongs to the person levied against and to follow the instructions on the levy form. Use the contact printed on the form. If the HOA owes nothing, tell that contact in writing so the file shows it. Texas. A writ from a district or county court is returnable at 10 a.m. on the Monday after 20 days from service; from a justice court, after 10 days (Texas Rule of Civil Procedure 661). The answer must be in writing, under oath and signed (Rule 665). If the garnishee does not answer in time, Rule 667 lets the court enter a default judgment against it for the full amount of the creditor's judgment against the vendor, plus interest and costs. That can be far more than the HOA ever owed. Florida. Section 77.04 requires the garnishee to serve its answer on the creditor within 20 days after service, plus up to one business day, stating whether it is indebted to the defendant and whether it knows of anyone else who is. A business entity may have an authorized employee or agent file the answer. Under section 77.28, the creditor must pay the garnishee $100 toward its attorney's fees, and the garnishee can request it any time after service. Colorado. The creditor serves Form 29, Writ of Garnishment with Notice of Exemption and Pending Levy. The Colorado Judicial Branch explains that the garnishee fills out the answer part of the form, files it with the court and sends the creditor a copy. The vendor then has 14 days to claim an exemption before the court can order the money paid. Use the answer date printed on the writ.

Releasing the money and closing the file

Pay only where you are told. For an IRS levy, send the frozen amount as the form directs. Under 26 U.S.C. 6332(e), a party that surrenders levied property is discharged from any obligation to the taxpayer for that amount, so the vendor cannot make the HOA pay again. Refusing has a price: section 6332(d) makes the holder personally liable for the amount, and adds a 50 percent penalty when the refusal lacks reasonable cause. If the vendor settles with the IRS first, ask for a copy of Form 668-D, the release of levy, before paying the vendor. For a court writ, hold the money until the court enters judgment and pay as that judgment directs, usually into the court registry or to the creditor. In Texas, Rule 677 taxes costs, including reasonable compensation to the garnishee, against the creditor when the garnishee is discharged on its answer, so keep a note of the hours and any attorney bill. On the books, record the payment as a payment of the vendor's invoice, with the levy or judgment attached. Send the vendor a copy and a short note showing which invoice it covered. Ask your tax preparer how the payment belongs on the vendor's 1099-NEC.

Wording the board can use

Put the decision in the minutes. A motion that fits most cases: "I move that the treasurer hold all amounts the association owed [vendor] as of [date and time served], file the association's answer to the [IRS levy / writ of garnishment in cause number ___] by [deadline], and release those funds only as the [IRS / court] directs. The president may sign the answer." A note to the vendor, sent the same week: "On [date] the association was served with [a Notice of Levy from the IRS / a writ of garnishment from the ___ Court] naming you. The law requires us to hold the $[amount] we owed you on that date and to answer the [IRS / court]. We cannot pay that amount to you unless we receive a release or court order. Questions about the underlying debt need to go to [the IRS office / the creditor's attorney] listed on the enclosed copy. This does not change our contract, and we will keep paying for work done after [date] unless we are served again." Only include that last sentence for an IRS levy or after your attorney confirms the writ does not reach later work. In Florida, invoices that come due before your answer are still caught.

If the levy names an employee

A few associations have a pool attendant or part-time manager on payroll. A wage levy works differently. The IRS gives employers at least one full pay period after receiving a Form 668-W before wage funds must go to the IRS, and the employee has three days to return a statement of dependents and filing status that sets the exempt amount. The levy keeps applying every payday until the IRS releases it. Send it to your payroll provider the day it arrives. Court writs on wages are narrower in Texas. Section 63.004 exempts current wages for personal service from garnishment except as state or federal law provides otherwise, which is why an IRS wage levy or a child support withholding order still reaches a Texas paycheck.

Mistakes boards make

Paying the vendor because the work is done. In Texas, that payment is void against the creditor, and the HOA pays again. Ignoring the writ because the HOA owes nothing. A garnishee that owes nothing still answers. In Texas, silence can turn into a default judgment for the vendor's whole debt. Letting the paper sit. Writs are often served on the registered agent on file with the state, who may be a former president. Others land with a manager who left, or a director on vacation. Name one person to open legal mail. Taking sides. The board is a stakeholder, not a referee. Don't tell the vendor the debt is unfair, and don't negotiate with the creditor over its size. Firing the vendor in a panic. A levy is not a breach of your contract. If the board wants out, read the termination clause first; our guide on HOA vendor contract red flags covers what a sound clause looks like. Missing the name match. Our guide on what to do when a vendor won't give the HOA a W-9 explains why a current W-9 matters, and this is one reason. If the association itself is the debtor in a lawsuit, that is a different job, covered in our guide on how to pay a judgment against an HOA.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

More on dues & money

Or browse all hoa dues, fees & money guides.