Stopping an IRS Wage Garnishment
When you owe money to the IRS, you’ll quickly learn that it is one of the most persistent collection agencies on Earth. The government has the authority to garnish your wages, salary, commissions, bonuses, and other forms of income without getting a court order first. It can also take more of your money than a regular creditor is allowed. The IRS wants its “pound of flesh.”
In general, the IRS will send you several notices before the garnishment process begins. Below is an overview of the wage levy process and what you can do to stop it.
The IRS Wage Garnishment Process
When the IRS determines that you owe a tax debt, it will send you several written notices itemizing the amount of overdue taxes, interest, and any applicable penalties. As soon as you receive the letter, it is best to talk to a tax lawyer, or simply pay the tax if you owe and can pay. If you don’t pay the balance in full by the specified due date on the letter, the IRS will eventually send you another notice, this one titled Final Notice of Intent to Levy and Notice of Your Right to a Hearing. If you still don’t pay within 30 days after receiving this final communication, the government may proceed with garnishing your wages.
Although the law limits how much other creditors can take from your income, the IRS doesn’t face similar restrictions. In some cases, the IRS will make sure to take most of your paycheck after you pay your current taxes, leaving you with little leftover. The U.S. tax code simply requires it to leave you with a certain amount of income for basic living necessities, meaning most of your wages are subject to garnishment by the government.
How To Stop a Wage Garnishment
To prevent or stop a wage garnishment, you need to resolve the situation with the IRS, either by paying the balance in full or entering into a mutually-acceptable repayment agreement. Safeguard Law can help you arrange a repayment plan that helps you not only square yourself with the IRS, but also be able to pay your bills and survive. If you can’t afford to pay your tax bill or dispute that you owe it, there are some other resolution options.
Installment Agreement
An installment agreement lets you pay the amount owed over a series of monthly payments, up to 6 years. This will be the most common result for most people if you have a positive disposable income. If you have filed all tax returns to date and owe $10,000 or less, you can qualify for a guaranteed installment agreement, which lets you pay off the debt over three years.
If you owe $50,000 or less, you may apply for a streamlined agreement that requires you to pay the debt within 72 months or before it becomes legally uncollectible, whichever comes first.
Offer In Compromise
You may be able to settle your tax debt for less than what you actually owe, but the IRS won’t automatically accept an offer in compromise. You must propose a settlement that equals or exceeds the amount that the government can reasonably hope to collect from you. You can also propose an offer in compromise when there is doubt about your tax liability or collecting the full amount would cause severe economic hardship, but these claims should only be made with help from an experienced tax attorney.
Like an installment agreement, you can only propose an offer in compromise if you have filed all of your tax returns to date. You must also be current on your estimated tax payments.
Currently Not Collectible Status
If you can prove that wage garnishment will prevent you and your family from meeting basic needs, the IRS may suspend collection activities until your financial situation improves. Like an offer in compromise, you will have to prove financially that you qualify for this type of relief.
File a Tax Levy Appeal
When you receive the notice of intent to levy, you have 30 days to call the IRS and request an appeal. Grounds for appealing include:
You already paid the debt in full
There were errors in your tax assessment
The statute of limitations for the debt has expired
You’d like to propose alternative payment arrangements
If you disagree with the appeal results, you can contest them within 30 days. Both requesting and contesting an appeal can be complicated and should be carried out with help from an experienced tax professional.