When you owe the IRS, they will stop at nothing to collect on that debt. If tax debt goes unpaid, the IRS resorts to tax liens and levies, but the most damaging may be the IRS wage garnishment. With a wage garnishment, the IRS can take money from your paycheck without you ever even seeing it first. Unlike an IRS bank levy, an IRS wage garnishment is immediate and continuous.
IRS wage garnishments are one of the most damaging and aggressive of the IRS collection tactics. The IRS can seize 50-75% of your pay, leaving you with barely enough to cover basic necessities. The IRS will notify a taxpayer’s employer to withhold a portion of the employee’s wages to be paid directly to the IRS or face penalties themselves. For the self-employed, the IRS sends the wage garnishment to the taxpayer’s customers. Amounts owed by customers is required to be sent directly to the IRS. A wage garnishment can have a serious adverse affect on a taxpayer’s finances and/or job.
Additionally, the IRS can also levy against:
- Social Security
- Mutual Funds
Wage garnishments can be released by following a precise process and selecting from various IRS relief programs, including:
- Installment Agreement
- Partial Payment Installment Agreement
- Currently Not Collectible
- Streamlined Installment Agreement
- Offer in Compromise
Call today for a free consultation to determine the best program for you!
Frequently Asked Questions About Wage Garnishment
What is a wage levy in regards to taxes?
Commonly referred to as wage garnishment, an IRS wage levy is when the Internal Revenue Service legally takes money directly from your paycheck to regroup taxes owed. The IRS will contact your employer, explains how much they should pay you, and how much money should go towards the IRS. The state also has the ability to garnish your wages.
How much of my wages can the IRS take?
In order for the IRS to garnish your wages they must send a publication 1494 to your employer. This form is a table which showcases how much a person will be paid, and how much the IRS is able to take. What determines how much they can take is your filing status, pay frequency, and the number of dependents you have claimed on your paycheck.
Can the IRS levy bonus payments?
Yes, the IRS can leby bonus payments. In this case your employer will send your whole paycheck to the IRS since the amount exempt from wage garnishment was already paid to you.
How can I stop wage garnishment?
Yes a person has the ability to stop a wage garnishment. First you will need to contact the IRS to reach an agreement or resolution regarding your wage garnishment. You can also apply for an offer in compromise or try to be declared uncollectible.
What are the laws on IRS Wage Garnishment? What are my rights?
In order for the IRS to garnish your wages the following three things must happen (there are exepctions in some cases)
1. The IRS must assess a tax liability and send you a notice to demand payment.
2. You must ignore the notices or refuse to pay the amount due.
3. The IRS has sent you a “Final Notice of Intent to Levy and Notice of Your Right to a Hearing” letter at least 30 days prior to the start of your wage garnishment.
What section of the Internal Revenue Code gives the IRS authorization to levy taxes?
The IRS is able to garnish your wages because of U.S. Code Section 6331 which authorizes the IRS to levy taxpayers in order to collect on back taxes.
What kind of wages can the IRS take or levy?
The IRS can garnish the following types of wages:
- payments on promissory notes
- bank account
- a joint bank account
- federal retirement annuity income from the Office of Personnel Management
- federal contractor payments
- retirement accounts
- your house
- property in your name
How can I avoid a tax-related wage garnishment?
The most effective way to avoid tax-related wage garnishment is to stay on top of all required tax filings. Make sure to pay the amount owed to the IRS and State. If you cannot afford to pay the IRS or State, make sure to contact a licensed tax professional for help. The IRS and many States have tax options available depending on your financial and tax situation such as settlements, payment plans, penalty reductions, and more.
How can a tax professional help with IRS or State Wage Garnishment?
A tax professional can help you with your wage garnishment problem by properly analyzing the situation and formulating a plan that will result in the best resolution for your needs. Furthermore an experienced tax professional can put a hold status on a IRS levy or negotiate an agreement on your behalf.
How can I schedule a consultation with Strategic Tax Resolution?
To schedule a consultation with Strategic Tax Resolution please contact us via our main office line (216) 260-1000 or by visiting our contact us page.