If you have received a Notice of Intent to Levy from the IRS, the experienced tax attorneys at Wiggam Law can help you negotiate payment plan strategies, and prevent wage garnishment and levies against other assets.
If you don’t pay your taxes, the IRS has the power to garnish your wages as well as levy or seize other assets, such as your bank accounts, real estate, or automobile. One of the keys to avoiding IRS wage garnishment or other IRS levies is to be proactive and communicate with the IRS. If you cannot pay your taxes, don’t just ignore IRS letters, billing notices, or even the notice of a potential IRS wage levy. Pay as much of your tax bill as you can and reach out to the agency about options for resolving the rest of your tax debt. Consider hiring an experienced tax attorney, who knows the specific rules and intricacies of negotiating payment plans with the IRS.
What is an IRS Levy?
An IRS levy is an action by the agency to collect an unpaid tax debt. A levy is different from a lien. A lien is a claim against your property or wages to secure payment. A levy is the actual movement by the IRS to do so.
The IRS generally will only levy your assets or wages after all of the following have occurred:
- The agency sent you a tax bill, otherwise known as a Notice and Demand for Payment.
- You ignored the bill or refused to pay the taxes due.
- The agency sent you a Final Notice of Intent to Levy, and Notice of Your Right to a Hearing at least 30 days prior to any levy.
- The IRS sent you a Third Party Contact notice, alerting you that it would attempt to collect your tax debt from a third party.
What is IRS Wage Garnishment?
The IRS can take a portion of your paycheck to satisfy your unpaid tax debt. When the agency does so, it will send an IRS levy notice (Form 668-W) to your employer with instructions to send part of your paycheck to the IRS. In addition to your salary and other wages, the IRS can also garnish retirement or pension income. As if to add insult to injury, the garnished wages are still taxed. When you receive your W-2 at the end of the year, the portion of income paid to the IRS will be included in total earnings and you will owe taxes on it even though it never entered your bank account.
The IRS generally takes a quarter of your paycheck or more each pay period. The agency uses a formula to calculate the portion of your wages exempt from the levy. In addition to other factors, the formula considers your dependents and the standard deduction for your filing status.
How to Stop an IRS Tax Levy
The best way tostop an IRS tax levyor garnishment of your wages is to respond to the agency as soon as you receive a notice of tax debt. Even if you cannot pay any of the debt immediately, you can negotiate with the IRS to set up a payment plan or other settlement agreement.
Options include:
- Short-term payment plan (120 days or less)
- Long-term payment plan or installment agreement (monthly payments to pay back total debt within six years)
- Offer in compromise to lower your overall debt and pay the balance in installments
All options require application with the IRS. The offer in compromise is a negotiation, where the IRS will consider your income, expenses, financial situation, and assets. An experienced tax attorney can help choose the best option for your circ*mstances, and negotiate with the IRS.
Can a Garnishment be Reversed?
Once started, a garnishment can be reversed by paying your tax debt or negotiating one of the payment options. How quickly this happens depends on how long it takes to negotiate the payment plan. An immediate or short-term payment plan will generally lead the IRS to immediately release a wage garnishment. An offer in compromise can sometimes take six months or more to negotiate, so reversing the garnishment will take at least that long. An experienced tax attorney can help you prepare for the negotiation and reach a quick and agreeable debt settlement as well as a payment plan so that you start receiving 100% of your paycheck again.
If you owe taxes and need help negotiating a payment plan or offer in compromise, or have received a notice from the IRS of potential wage garnishment, contact the experienced tax attorneys at Wiggam Law. We can help you evaluate your options and negotiate with the IRS. Give us a call today at(404) 233-9800to get started.
I've spent years specializing in tax law, particularly in dealing with IRS notices, wage garnishments, and levy actions. Here's the breakdown of the key concepts in the article:
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IRS Levy vs. Lien:
- A levy is the actual action taken by the IRS to collect unpaid tax debts by seizing assets or wages.
- A lien, on the other hand, is a claim against your property or wages to secure payment.
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IRS Wage Garnishment:
- This involves the IRS taking a portion of your paycheck or other income sources to satisfy unpaid tax debts.
- They send a levy notice (Form 668-W) to your employer to redirect a portion of your income to the IRS.
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Process of IRS Collection:
- The IRS typically follows a sequence before resorting to levy actions, including sending a tax bill, issuing a Final Notice of Intent to Levy, and providing a 30-day notice of your right to a hearing.
- They might also notify third parties involved before the levy.
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Preventing Levy or Garnishment:
- Being proactive and communicating with the IRS upon receiving a notice of tax debt is crucial.
- Paying what you can and exploring options for resolving the remaining tax debt is advisable.
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Stopping IRS Levy or Garnishment:
- Responding promptly to the agency upon receiving a tax debt notice is key.
- Negotiating payment plans or settlement agreements like short-term or long-term payment plans, installment agreements, or an offer in compromise are potential options.
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Reversing a Garnishment:
- Paying the tax debt or negotiating one of the payment options can reverse a garnishment.
- The time to reverse depends on the negotiated payment plan; some options take longer to settle.
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Role of a Tax Attorney:
- An experienced tax attorney can be instrumental in choosing the best option for your situation, negotiating with the IRS, and guiding you through the process to attain an agreeable debt settlement and payment plan.
Understanding these concepts is vital when dealing with IRS notices, wage garnishments, or levies. It's crucial to act swiftly upon receiving any IRS communication and seek professional assistance, like the services provided by Wiggam Law, to navigate these complex tax matters and negotiate with the IRS effectively.
