Wage garnishment is one of many ways theIRShas to collect your tax debt. Though liens and levies are used as well,IRSwage garnishment is more common. So, if you owe theIRS, it’s important to know how wage garnishment works, and what you can do to stop it. For more information, speak to aFairfax, VAIRSattorneytoday atSodowskyLaw Firm, PC.
What Is Wage Garnishment?
Under federal law, theIRScan seize your income to retrieve any federal tax debt you owe. This includes your wages, salary, commissions, and bonuses.
TheIRScan garnish your wages without taking you to court. And, it can take a higher amount of your wages than a private creditor could. Generally, they’ll garnish 70% or more of your income. They have to leave just $375 from each of yourpaychecksso you can support yourself and your household. But, if you’re self-employed, they can take all of your income.
What Is the Wage Garnishment Process?
Before they take your wages, theIRSneeds to follow a process prescribed by the law.
Written Notice
First, theIRSmust send you ample written notice in advance of any garnishment action.
The notice will provide the amount you owe. This includes penalties and interest on top of the principal tax debt. It will also give you a due date to pay off your balance. This gives you a chance to stopIRSwage garnishment before it can begin.
Second Notice
TheIRSwill send a second notice if you don’t pay your balance in full after their deadline. This “Final Notice of Intent to Levy” must be sent by registered or certified mail 30 days before wage garnishment.
Final Notice
The final notice will include a letter that informs you of your right to an appeal. You must file your appeal request within 30 days after the date of the Final Notice to preserve certain other legal rights and put a hold on further IRS collection action pending resolution of your appeal. If you don’t take action by the end of the 30-day window, the IRS can start garnishing your wages.
TheIRSwill require that your employer send a specific amount of yourpaycheckdirectly to them. Your employer must start within one pay period of receiving notice and continue until your debt is paid.
6 Ways to StopIRSWage Garnishment
Whether you’ve received your first or finalIRSnotice, you have options to stop theIRSfrom seizing your income. Here are six ways to resolve your tax troubles:
1. Change of Employment
The easiest thing to do is change your employer. This is a temporary solution, however, since theIRSwill inevitably find you and your new employer. Once they do, they will reissue the wage garnishment.
2. Installment Plan
The IRS will let you pay your balance over time if you work out an installment plan with them. You will need to engage the IRS and demonstrate that you cannot repay your whole debt at once. As part of the installment plan, you will have to make monthly payments until your debt is paid in full. If they agree to the plan, the IRS will not stop their attempt to garnish your wages. Click here to read more on Installment Plan.
3. Offer in Compromise
If you can’t pay your debt due to financial hardship, theIRScould make an offer in compromise. In doing so, they will reduce the amount you owe.
Qualifying for this selective program requires an application. But, the good news is that theIRSwage garnishment will be stopped while your application is being reviewed.
4. Financial Hardship Exemption
TheIRScould forgive your debt if you demonstrate that paying it back will cause you extreme financial hardship. But, you must prove that wage garnishment or repayment will prevent you from caring for the basic needs of your family.
5. Appeal
Under the law, you have the right to an appeal ofIRSwage garnishment if you dispute what you owe. You must request an appeal within 30 days of receiving theIRS“Final Notice of Intent to Levy”.
6. Bankruptcy
Your tax debt could bedischarged through bankruptcy. However, bankruptcy should be a last resort. It’s difficult to know how much of your tax debt isdischargeable. Non-dischargeabletax debt will need to be paid even after bankruptcy.
The most you could hope for is forIRSwage garnishment to stop during your bankruptcy. However, bankruptcy will damage your credit for a long time, leaving you unable to buy a car, home, or business.
Learn More About How to StopIRSWage Garnishment
IRSwage garnishment will result in financial hardship that could plague you for years. You need the help of an experienced Fairfax VA tax attorney to evaluate what you can do to stop theIRSfrom garnishing your wages. AtSodowskyLaw Firm, PC,we have years of experience helping clientswithIRStax debt avoid wage garnishment. Contact ustoday to learn more about our services.
As a seasoned expert in tax law and IRS procedures, I've navigated the intricate landscape of wage garnishment and other debt collection methods. My extensive experience allows me to shed light on the concepts embedded in the provided article.
Wage Garnishment Overview: Wage garnishment is a potent tool in the IRS's arsenal to collect outstanding tax debts. Unlike liens and levies, wage garnishment involves seizing a portion of your income directly from your employer. This method is remarkably common, underscoring its effectiveness in recovering federal tax debts.
IRS Authority and Scope: Under federal law, the IRS possesses the authority to garnish various income sources, including wages, salary, commissions, and bonuses. Importantly, unlike private creditors, the IRS can initiate wage garnishment without taking the taxpayer to court. The IRS can garnish a substantial portion of income, often exceeding 70%, leaving only a minimal amount (like $375 per paycheck) for the taxpayer's support and household expenses.
Wage Garnishment Process: The IRS follows a meticulous process before resorting to wage garnishment. The process includes sending written notices to the taxpayer. The initial notice details the amount owed, encompassing penalties and interest. This notice provides an opportunity for the taxpayer to prevent wage garnishment. A final notice is sent if the debt remains unpaid, outlining the right to appeal and initiating a 30-day window for action. Failure to act within this period empowers the IRS to commence wage garnishment.
Methods to Stop IRS Wage Garnishment: The article outlines several strategies to halt or alleviate IRS wage garnishment:
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Change of Employment: While a temporary solution, changing employers doesn't provide a lasting escape from the IRS.
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Installment Plan: Negotiating an installment plan with the IRS allows the taxpayer to pay the balance over time through monthly payments.
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Offer in Compromise: For those facing financial hardship, the IRS may consider reducing the owed amount through an offer in compromise, temporarily stopping wage garnishment during the review.
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Financial Hardship Exemption: Demonstrating extreme financial hardship could lead to debt forgiveness, sparing the taxpayer from wage garnishment.
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Appeal: Taxpayers can exercise their right to appeal if they dispute the amount owed, initiating a process that can halt garnishment temporarily.
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Bankruptcy: While a last resort, bankruptcy could potentially discharge tax debt. However, its implications on credit and the dischargeability of tax debt make it a complex option.
In conclusion, navigating the complexities of IRS wage garnishment requires a nuanced understanding of tax law and a strategic approach. Consulting with a seasoned Fairfax, VA IRS attorney, such as those at Sodowsky Law Firm, PC, can provide essential guidance and support in resolving IRS tax debt issues.
