IRS Garnishment

IRS Garnishment An IRS levy is a seizure of property of the taxpayer who has an outstanding liability to the government. It can affect both your actual property (such as your house, money in your bank account, etc.) and your rights to property (for example, your future income or Social Security payments). When the IRS refers to "wage garnishment" it actually means levy of your income.

Wage garnishment it not a one-time event. IRS wage garnishment continues until the debt is satisfied, which means the IRS will be taking money from every one of your paychecks. Wage garnishments are serious and often complex, so it is usually best to consult a tax resolution specialist to help you make the right decision on how to proceed.

The IRS sends many different letters and notices to notify a taxpayer about past due taxes. Although it is important not to ignore these letters, there is one that is particularly important, called Final Notice of Intent to Levy. The IRS Final Notice is the last warning that the situation needs to be resolved, or the government will proceed with enforced collections. The IRS garnishment is one of various collection activities that can be initiated 30 days after the date on the Final Notice. If you are still within the 30 day timeframe, you can contact the IRS to full pay the debt, negotiate a repayment option, or file Collection Due Process Hearing request to appeal the IRS decision.

If you missed the deadline to file an appeal and the IRS sent a Notice of Levy on Wages to your employer, there is still something you can do. First of all, it is important to have all exemptions listed correctly on your W4 form. There is a certain amount that the IRS has to exempt from a levy on wages to make sure you and your dependants have the necessary minimum income to live on. According to 2013 Tables for Figuring Amount Exempt from Levy on Wages, the monthly exempt amount for a person filing as single is $833.33 and increases with each additional exemption.

After you make sure that your W4 form reflects the correct amount of exemptions, the next step is to try to get the garnishment released. The IRS will release it immediately if you enter into an Installment Agreement. However, the amount of your monthly payments the IRS will be willing to accept on a payment plan might be too high. This is why it is important not to disclose any financial information to the IRS without discussing it with a tax debt specialist, who can review your financial statement and prepare a payment plan proposal for the amount you can actually afford.

In addition, in some situations the IRS can release wage garnishment even if a taxpayer does not enter into an Installment Agreement based on the fact that the IRS collection action created economic hardship for the taxpayer. However, proving this can be difficult.

There are many factors to consider when planning a resolution strategy, including your level of income, allowable exemptions, your overall debt, and much more. Unless your debt is very small and will quickly be paid, it’s always best to consult a professional. 20/20 Tax Resolution provides free consultations to help taxpayers better understand their situation.

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