Which form notifies an employer that an employee's wages have been released from a levy?

The correct answer is rooted in understanding the specific IRS forms and their purposes related to wage levies. The form that notifies an employer that an employee's wages have been released from a levy is the 668-D. This form, known as the "Notice of Levy on Wages, Salary, and Other Income," is used by the IRS to formally release the levy, allowing the employer to stop withholding wages for the employee whose earnings were previously levied.

The process involves the IRS initially issuing a levy (via a different form, typically the 668-W) after determining that the individual owes back taxes. When the tax obligation is satisfied or resolved, the IRS subsequently issues the 668-D to notify the employer to cease withholding. This direct communication is critical for both the employer and employee to clarify the current status of the employee’s wages.

Being aware of these specific forms and their functions is a crucial aspect of payroll processing and compliance. It ensures that all parties are informed about the changes in a levy situation, facilitating proper payroll management and adherence to legal requirements.