IRS Wage Garnishment
Generally speaking an IRS wage garnishment, or deduction of money from a taxpayer’s paycheck, should come as little surprise. The IRS has a series of notices they send taxpayers, each with a more serious tone than the previous one. The wage garnishment is one of the IRS’s more aggressive forms of tax collection and should be taken very seriously. You must understand how wage garnishments work in order to protect your livelihood and that of your family.
How Does the IRS Take a Portion of Your Paycheck?
If you have ignored the repeated warnings of the IRS in the form of letters and notices, then the IRS may contact your employer and order them take part of every paycheck and send that money to the IRS. Should your employer refuse to do so, they can be held responsible for any amount which was not levied therefore it’s a safe bet to assume your employer will comply with the orders from the IRS. The IRS is legally allowed to take a portion of your regular wages, any bonuses you might be entitled to, and in some cases even money from your retirement plan.
Typically the IRS will take 25% or more of your pay without a thought as to how—or if—you will pay your bills and feed your family. The wage levy will endure until a sufficient amount of your monthly paychecks have been seized to fulfill your tax obligation along with any assessed interest and penalties. Remember that it is entirely likely that the IRS will take greater amounts of your paycheck than they will if you cooperate with them and set up a payment plan or other alternate form of payment. Tax garnishments are costly to the IRS however they find them an extremely effective scare tactic and will not hesitate to implement this tactic if the taxpayer refuses to pay.
How to Get Your IRS Wage Garnishment Released
Of course the most obvious way to have the wage garnishment released is to pay the IRS in full, including any interest and penalties. Unfortunately most people who are in this situation simply don’t have the funds to pay the IRS in full. You could consider a loan from friends or family, the sale of an asset or even refinancing your home in order to pay the IRS the money owed them. You could also file for an offer in compromise with the IRS which is essentially your offer to make alternative arrangements.
Many times this will allow taxpayers to settle their taxes for only a fraction of what is owed, however it can be extremely difficult to reach such a settlement with the IRS. Filing for an offer in compromise is a complex matter, and if you are considering pursuing this option you should definitely consult an experienced tax attorney to assist you. The IRS would be more likely to agree to a payment plan which would allow you to pay your back taxes in the form of a monthly installment plan over a period of three years. So long as you continue to make your regular, agreed-upon payments, your wage garnishment will be suspended and you will be back in relative good standing with the IRS.
Claiming Financial Hardship
If you can prove that the wage garnishment against you by the IRS is causing you severe financial hardship, the IRS will be obligated to temporarily stop collection actions until your financial standing has improved. In other words, if the IRS wage garnishment leaves you unable to pay normal living expenses, then they will not be able to implement the garnishment. You must prove this fact, however, as they will hardly take your word for it. You will have to file specific paperwork and provide financial records in order to prove to the IRS that you don’t have sufficient income for a wage garnishment. Some people who have found themselves under an IRS wage garnishment either change jobs or simply quit. If you change jobs it will likely take the IRS a few months to catch up to your new job and start garnishment proceedings again. You could also file for bankruptcy, which automatically stops wage garnishment, however this is a major step and should only be used as a last resort. If you are under threat of IRS wage garnishment don’t wait—consult with a knowledgeable tax attorney immediately to discuss your options.