Wage Garnishment – Frequently Asked Questions (FAQs)
What is a Wage Garnishment?
A wage levy or wage garnishment is the legal way the IRS can collect your tax liability. They can force you into paying your debt. The IRS will contact your current employer and send them a notice of wage levy. Your employer will then take a portion of your pay and send it to the IRS (up to 80% of your gross wages) and then you get what is left. Can you live on what the IRS will leave you?
Can a garnishment be stopped even after the IRS has started to garnish my wages?
- Yes! A wage garnishment can be stopped. The garnishment can be stopped, even after the IRS has started to garnish your paycheck. The IRS would prefer you to make some other form of payment arrangement rather than to enforce a garnishment.
- Some options can be to pay the IRS in full
- Enter into an installment agreement. This is the most common way to stop a levy.
- File for an offer in compromise. If you cannot at any point in the future fully pay the IRS debt, an offer in compromise maybe the best way to resolve your problem.
- The IRS has the power to grant a Currently Not Collectible status. This allows the taxpayer time to financially recover. The IRS will not seek collections while a taxpayer’s account is Not Collectible.
- File bankruptcy. This action will cease all IRS collections actions. Many taxpayers come into our offices financially devastated. This may be their only recourse.
- Change employers or quit your job. You don’t get out of a hole by digging it deeper. Employment and a good job are hard to come by these days. I would never advocate this approach to dealing with your IRS problem. I don’t like to run from problems, I like to deal with problems head on.
- The most common methods to stop a levy are to enter into an installment agreement, pay in full or file for an offer in compromise.
How much of my wages can the IRS take?
The IRS has a chart that shows your employer what to deduct. The chart shows exactly how much they can take from you. The IRS’s goal is to collect all monies owed to them in the fastest way possible. They don’t care if they leave you enough money to live on. Their chart uses the “national average” of required amounts to live and if your bills are higher than the average, you will be left with an amount not high enough to pay your bills. We have seen the IRS take 80% of our client’s paycheck, until the taxpayer has fully repaid the tax debt.
What kinds of wages can the IRS take?
The IRS can seize your salary, commissions and bonuses. The IRS can seize other types of income as well, they can seize retirement money and pension earnings, rental income and dividend income. If you do not have any of those they will likely try to seize any other property you have, like your bank accounts and other property you own.
How can I avoid the IRS from garnishing my wages and property?
The best way to avoid any levy action is to prepare and file all required tax filings and pay all taxes owed to the IRS. If you cannot afford to pay the IRS you must propose another form of payment arrangement to ensure that you pay back your taxes. The IRS has some flexibility and they have many methods available for those taxpayers that cannot afford their taxes. The repayment method you pick depends upon your financial and tax situation.
Does the IRS have to obey any rules / laws on garnishments? What are my Tax Payer Rights?
- The IRS must send a Final Notice of Intent to Levy a Letter 1058 and a notice of your right to a hearing. These notices must give the tax payer at least 30 days before the IRS can begin to levy your wages.
- The IRS must have assessed the tax liability and sent you a notice to demand payment prior to the levy. The assessment of the tax will generate several letters. You must open these letters and understand what the IRS is telling you.
- The tax payer must have “neglected or refused to pay” the amount of tax that was assessed by the IRS. In other words, you didn’t have the money, so you didn’t pay the taxes, and instead of working with the IRS, you ignored them.
How can Tax Matters Solutions, LLC help with an IRS wage garnishment?
Tax Matters Solutions, LLC can help more than most people realize. We routinely obtain wage levy releases for our clients. Normally, a release of levy takes 2-5 business days. Even if the levy has already begun, contact us immediately, we can still obtain a wage levy release. To obtain a release of levy a tax payer must propose a collection alternative. The IRS has many programs and options available for you. Most likely, you will need a professional to analyze your financial and tax situation to determine the collection alternative that best suits your situation. You may not have the knowledge and experience to negotiate on your behalf as well as we can. You cannot afford to wait. The longer you wait the more of your income or property the IRS can take. If you hire us today, within 2-5 business days, we can obtain a wage levy release and begin the work needed to get you back into good standing with the IRS.
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