Wage Garnishments Featured Article

Introduction

Unpaid federal taxes can lead to collection action, including a wage levy. The IRS must meet applicable assessment, notice and hearing requirements, subject to statutory exceptions. A taxpayer should review the actual notice and its deadline promptly.

An IRS wage levy generally continues against future salary or wages until released or the liability is satisfied. Part of the taxpayer’s wages is exempt. Release can be available before full payment under applicable grounds, including an IRS determination of economic hardship.

A wage garnishment has several negative consequences, so it is best to get rid of it as soon as possible. Removing a wage garnishment, however, is not always easy. In fact, it can be quite difficult to convince the government to remove a wage garnishment. This article will review the basic ways to get rid of a wage garnishment. However, some situations require solutions that are much more complex in order to get rid of a wage garnishment.

A qualified tax attorney can review the notice, financial circumstances and available collection alternatives or appeals. Results and timing depend on the facts and applicable rules; retaining counsel does not guarantee levy release.

In order to explain the extent of the negative effects a wage garnishment can have on an individual, it is helpful to compare a wage garnishment to a leech. A wage garnishment is not very different from a leech. It attaches to paychecks and feeds on it in order to satisfy its needs. Fortunately, just like a leech, a wage garnishment can be removed from one’s life using several different methods. This must be done quickly and efficiently in order to prevent further damage. If left alone for too long, a wage garnishment can negatively impact an individual’s overall financial status. This must be dealt with rapidly.

The Basics Process Behind a Wage Garnishment

A federal wage levy does not require proof that the taxpayer deliberately ignored taxes for an extended period. Generally, the IRS assesses the tax, sends a notice and demand for payment, and provides the required levy and hearing notice before levying. Statutory exceptions can change the timing. Review the notice itself rather than relying on its tone or the number of earlier letters. Related guidance: back taxes.

An individual will be assessed several penalties and fines prior to receiving a wage garnishment. By the time a wage garnishment is issued, it is not only the original tax amount that is being collected. On top of the back tax, a wage garnishment accounts for penalties and interest assessed on the original amount. Fines and penalties quickly rack up and contribute to the total amount owed to the government. This amount is much greater than what it would have been if the individual had paid taxes on time.

A federal tax lien is a legal claim securing back taxes. A Notice of Federal Tax Lien provides public notice of that claim. A levy collects from property, such as wages or a bank account. A wage levy does not depend on a lien notice listing a paycheck as collateral. The lien and the levy serve different purposes; applicable notice and hearing rules, exceptions and release grounds govern the levy. A tax lien alone does not transfer part of the taxpayer’s next paycheck to the government.

Function of Wage Garnishment

A federal wage levy collects nonexempt wages toward the assessed tax debt. It generally continues until released or the liability is satisfied, but it is not irrevocable. Applicable notice and hearing rules, exceptions and statutory release grounds govern the action. Related guidance: back taxes.

A wage garnishment essentially forces an individual to do what they should have been doing all along: use part of the paycheck to pay for taxes. Therefore, in order to prevent a wage garnishment, it is reasonable to use wages to quickly pay for taxes that are owed. Even if an individual is in a tight spot financially, they should opt to pay on their own out of their own free will before the government forces them to with the wage garnishment. It is better to choose a certain method that allows for more freedom than it is to be forced to comply with certain standards.

Getting Rid of the Wage Garnishment

To get rid of a wage garnishment, there are several things that can be done. First of all, if there is anything of value that is not already listed in a lien or levy, an individual can pay the government for the remaining balance. Perhaps this means taking money from a savings account in order to get rid of a wage garnishment. Perhaps there is valuable personal property that the government has not attempted to claim yet.

An IRS installment agreement sets approved payment amounts, dates and other terms. Some agreements provide for partial payment under applicable rules. Entering an agreement generally requires levy release unless the agreement permits the levy to continue; a taxpayer cannot unilaterally choose terms or assume release.

An offer in compromise may settle eligible tax liabilities for less than the full balance under recognized grounds and acceptance criteria. Eligibility and financial information must be evaluated; a hardship assertion does not guarantee acceptance. Separately, if the IRS determines a wage levy prevents payment of basic, reasonable living expenses, it must release that levy. Release does not erase the debt. Related guidance: offer in compromise; back taxes.

The Specifics

Now that the article has reviewed the basic elements of a wage garnishment, it will now go over several specific aspects of it. These elements are critical to a more complete understanding of a wage garnishment. If one wishes to be educated in a manner that goes beyond the article, they must consult with a qualified tax attorney. A properly educated tax attorney with enough experience knows everything there is to know about a wage garnishment. The questions answered below can only go so far. Professional legal advice can go a very long way in getting rid of a wage garnishment.

Portions and Term

An IRS wage levy generally continues until released or the liability is satisfied. The taxpayer keeps the exempt amount determined using Publication 1494; income above that amount may be levied. There is no universal 85 percent maximum.

Self-employment or receipt of Form 1099 does not by itself determine whether a levy is continuous. IRS rules treat salary or wages, including certain fees, bonuses and commissions, as subject to continuous levy. Other levies generally attach property or rights existing when served, including qualifying fixed and determinable rights to future payments. The nature of the payment and right must be reviewed; there is no universal requirement to repeat the entire levy process for every self-employed payment.

A wage levy can leave a taxpayer unable to afford food, housing or medical care. If the IRS determines the levy causes economic hardship, it must release the wage levy. Appeal and collection-alternative options depend on the notice and facts; seek assistance promptly.

Speculation

The number of notices a taxpayer remembers receiving does not establish how close a wage levy is. Obtain and review the actual account records and notices, including applicable appeal deadlines, and contact the IRS promptly about unpaid tax or a threatened levy.

Read each notice for the liability, proposed action and response deadline. Earlier past-due letters do not by themselves establish a predictable sequence or timetable for a wage levy. Related guidance: tax liens.

Generally, the IRS must provide a notice of intent to levy and notice of the right to a hearing at least 30 days before a levy. Statutory exceptions apply. A wage levy does not depend on an earlier lien notice identifying wages as collateral. Follow the appeal instructions and deadline on the actual notice. Related guidance: tax liens.

A lien or another levy does not automatically result in a wage levy. The IRS selects collection actions under applicable rules and need not exhaust every other asset first. A wage levy does not establish that the taxpayer has nothing else available to pay. Related guidance: tax lien.

Stopping a Wage Garnishment

Available ways to seek levy release depend on the reason for collection and the taxpayer’s circumstances. Contact the IRS promptly to discuss payment, an eligible collection alternative, an error or economic hardship. Neither a short-term plan nor an intention to pay guarantees immediate release.

A long-term plan deals with taking a step back and considering every option. This generally takes a lot more work, but it can give an individual more understanding of what must be done. A long-term plan involves more research but it opens up options for taking care of a wage garnishment. In some cases, due to actions taken by the long-term plans discussed below, an individual may actually be “forgiven” for a portion of their taxes. Once again, it is imperative that a tax lawyer is contacted in order to receive the best advice about what to do with a wage garnishment.

Short Term Plans

Borrowing to pay tax should be considered only after reviewing affordability and other available options. A wage levy alone does not establish the taxpayer’s credit score or prove that a lender will reject an application. Levy release depends on applicable IRS requirements, not simply a decision to borrow.

Family and friends who are willing to lend money may prove to be incredible help when it comes to getting rid of a wage garnishment. If an individual knows anyone who can “spot” them the money, then they will make progress toward removing the wage garnishment. In order to do so, however, they must find an individual willing to take a risk by lending them money.

An installment agreement is an approved payment arrangement with the IRS. Its amount, schedule and conditions must be accepted under applicable rules. It is different from an involuntary wage levy, and an agreement generally requires levy release unless its terms permit continuation.

Long Term Plans

There are several types of long term plans to help solve the problem of wage garnishment. The taxpayer must be ready to do adequate research to retrieve information that will be most helpful to them. Long-term plans are very helpful to individuals who believe they can make an appeal that they were taxed too much. This can greatly increase the chances of convincing the IRS to remove the wage garnishment.

Review and file legally required returns and check the assessed liability. Filing compliance matters for many collection alternatives, but a taxpayer should not delay a timely appeal or an immediate economic-hardship release request while resolving missing returns. Related guidance: back taxes.

Review whether all legally required returns have been filed and whether the assessed liability is correct. A properly supported return may establish deductions or credits omitted from an IRS substitute return. Correcting filing compliance is important, but it does not by itself guarantee reduction of the debt or release of a wage levy.

Another option to get rid of a wage garnishment is to turn in an offer in compromise. A detailed description of an offer in compromise can be found on this site under the tab labeled “tax services” at the top of the page. Basically, an offer in compromise makes an appeal to reduce the amount of back taxes owed. This may mean that the government will remove the wage garnishment. However, there are several qualifications that one must have in order to submit an offer in compromise. It is not for everyone.

An offer in compromise is one of many ways to get rid of a wage garnishment. One must consult a tax lawyer to get a clear picture of what option is best for them. There are several other long-term options other than the ones listed above. Many of them are very complex and require direct consultation with a qualified individual. For example, one may also consider declaring bankruptcy in order to increase the chances of having the wage garnishment removed. This must be done in such a manner that provides the most benefit to the taxpayer. If it is not a good option, there are several other choices that can be made to get rid of a wage garnishment. Once again, a tax lawyer can provide incredible service to benefit those who have a tax levy or a wage garnishment.

Appealing a Wage Garnishment

An individual may determine that it is appropriate to appeal a wage garnishment if they believe they have a legitimate reason. However, the government has very specific conditions for listening to an appeal. An appeal for a wage garnishment must have compelling information that would cause the government to change its mind. If successful, an appeal for a garnishment will reduce the burden that is brought about by paying back taxes.

This article will be discussing how to appeal a wage garnishment after it has already been issued. However, it is very important to note that an individual does not have to wait for a wage garnishment in order to make an appeal. If a taxpayer believes they have substantial basis for an appeal that has not been brought to the attention of the government, they must make that their priority. This can, and should, be done before the wage garnishment has been issued.

Considering the Final Notice

The following will discuss what an individual must do after the final notice regarding the wage garnishment has been issued. The individual must, of course, observe this “final notice”. Take note that usually the final notice has to do with all levies in general rather than just the wage garnishment. The final notice contains instructions for those individuals who are dealing with wage garnishment and other tax levy issues. (For more information on what is included in this final notice, go to the “tax “services” tab and click on “tax levy”.) One of the items included is an application for an appeal.

Reasons for Appeal

There are many reasons to appeal a wage garnishment (or a tax levy). For one thing, the government’s record of taxes may have been inaccurate. The government is mostly correct but it is far from perfect. One should not believe that they have to pay the taxes just because the government says so. An individual must always go back and make sure that their records of taxes due can be reconciled with the government. If this has not been done thoroughly, there is really no way to get around a wage garnishment.

As discussed earlier in the article, in order to get rid of a wage garnishment, it is critical to review all tax returns for the years that are in question. In fact, the government actually expects individuals to go back and correct their unfiled tax returns. There are fines and penalties that deal with unfiled tax returns that only add to the burden of a wage garnishment. There is no good reason to leave a tax return unfiled.

If an individual believes they have found a discrepancy in the tax burden expected by the government, they have every reason to appeal the wage garnishment. Such discrepancies can be uncovered by filing old tax returns. If an individual finds something in the tax return that the government needs to know about, they may use that as the grounds for their appeal.

The government does not think too favorably on those who have unfiled returns. However, if the appeal reasonably explains the difference between the government’s expectations and the taxpayer’s calculations, the IRS may adjust the amount of taxes that are due. This may, in turn, lead to the removal of a wage garnishment. However, the amount of the discrepancy must be substantial enough to support such a move. One must also take into account that the government may indeed be on track with the amount that would have been reported on the tax return.

Although it would be rather late to bring it up to the IRS, it is possible that an individual paid all taxes and the government made an error. This would mean that the wage garnishment had been improperly issued. This circumstance normally deals with tax payments that had been made recently. Earlier cases of full tax payment would have probably been noticed before the wage garnishment was issued. If one believes that for some reason their payment has not been put on record, they may appeal the wage garnishment.

A processable offer is pending when accepted for processing under IRS rules. Restrictions on new levies generally apply while an offer is pending, for 30 days after rejection and during a timely rejection appeal, subject to exceptions. A pending offer does not automatically release an existing continuous wage levy. Review applicable levy-appeal deadlines separately. Related guidance: offer in compromise.

Acceptance of an offer requires compliance with its payment and other terms. Do not assume an employer has stopped honoring an existing levy: confirm the IRS has issued any required release and the employer has received it. Approval is not evidence that the original levy was unlawful. Related guidance: offer in compromise.

One more reason to appeal a wage garnishment deals with installment payments. One of the ways to deal with back taxes and prevent a wage garnishment is to go to the IRS and arrange an installment payment. This installment payment allows for an individual to determine how much they pay and when they pay it (within the bounds of the IRS). If an individual has stayed consistent with installment payments, they may have good reason to appeal the wage garnishment.

An installment agreement generally requires levy release unless it permits the levy to continue. Default does not eliminate applicable notice, appeal rights or other levy restrictions. Review the agreement and any proposed termination notice; responsible payment alone does not guarantee approval of every appeal. Related guidance: back taxes.

One may also appeal a wage garnishment if they believe that the IRS has not fully considered their effort. If one finally decides to go back and file their tax returns, then the government will look favorably on them. This must, of course, be accompanied by active payment for back taxes. Normally, this is satisfied by proper installment payments.

As mentioned above, it is best to try and set up installment payments in order to remove a wage garnishment and give more control to the taxpayer. If an individual believes that they have been denied the option of installment payments for the wrong reason, they may use that to appeal the wage garnishment. It is much better to have the installment plan than a tax levy or wage garnishment. Therefore, an individual must use this option if available. If it is not available, then the individual should strongly consider an appeal for both the installment plan and the wage garnishment.

There are several other reasons for an appeal. If the IRS determines that the appeal is legitimate, it may remove the wage garnishment and give control to the taxpayer. This is why an appeal can be a very useful tool. For some individuals, the results of an appeal can have a major impact on their lives.

The importance and value of the appeal provide yet another reason to consult with a qualified tax attorney who knows what they are doing. A tax attorney can help an individual consider all of their options, even those that they did not initially believe to be possible. It is important for all options to be considered so that a wage garnishment can be taken care of. A tax lawyer with a significant amount of experience knows everything about wage garnishment and appeals.

A tax attorney can help evaluate appeal rights and collection alternatives. Taxpayers may also act for themselves or use another eligible representative where permitted. Representation does not guarantee that an appeal will succeed.

Alternative Option to Dealing With A Wage Garnishment

Although it is strongly recommended to consult a tax lawyer, there are other options for those who wish to deal with a wage garnishment. A simple call to the IRS may solve many problems. Many people do not consider this to be an option since they believe the IRS will be strict and harsh. This is not always the case. If an individual contacts the IRS because they are seeking a reasonable way to pay for taxes, the IRS will help. For basic questions and answers, the IRS is a great resource for those dealing with wage garnishment.

On top of being able to contact the IRS, there is usually a lot of information that is sent with all of the notices regarding back taxes and potential wage garnishment. The IRS wants people to pay, so they make sure that they are informed. The Final Notice regarding a tax levy usually comes with a few items that describe options for those who wish to prevent it. However, these handouts are still very technical and may require the assistance of another individual. In order to ensure the riddance of a wage garnishment, one must be absolutely sure they know what they are doing. Sometimes, this involves contacting a lawyer to verify one’s own understanding.

Conclusion

A wage garnishment has a very negative impact on those who are behind on taxes. It means that the government can directly deduct tax payments from a paycheck. A wage garnishment must be taken care of quickly in order to prevent further action from the government. There are many ways to take care of, or otherwise prevent, a wage garnishment.

Review the actual notice and response deadline promptly. A wage levy does not require the IRS to exhaust more valuable property first, and the number of notices received does not establish a reliable countdown. An approved installment agreement or another applicable release ground may resolve the levy; eligibility and terms depend on the facts. Related guidance: back taxes.

Once a final notice to tax levy or a wage garnishment has been sent, there are still options available. The priority of the taxpayer should be to get rid of the wage garnishment, and they can do so by paying attention to the options provided by the IRS. One way to remove a wage garnishment is to file a legitimate appeal. If an individual can present valid evidence to the government that proves that a wage garnishment is inappropriate, the IRS will consider its removal.

Deciding on the specific appeal, and how to present it, is often a challenge. Therefore, it is extremely useful to ask for the help of a qualified tax attorney in order to remove a wage garnishment. A tax attorney does everything that they can to make sure a taxpayer benefits the most. A tax attorney can present innovative and convincing ways to ask the IRS to remove a wage garnishment. Tax lawyers know the ins and outs of tax law and have the experience necessary to assist a taxpayer in need.

A wage garnishment is like a leech. It locks itself onto the income of an individual and feeds on as much of it as it can get. If a wage garnishment is ignored for too long, it can destroy an individual’s finances. Eventually, this interferes with the most basic aspects of life such as food, shelter, and other needs. Life becomes especially difficult for those who suffer from having a wage garnishment with a high rate of collection. The individual who suffers can remove this “leech”, but it is much better to seek help from a professional “doctor”: a qualified tax attorney. A tax attorney can make everything better in regards to the burden of paying back taxes and dealing with the consequences of neglecting them.

Address filing compliance and the tax debt promptly, but full payment of every past tax liability is not the only basis for wage-levy release. Applicable release grounds include an IRS determination of economic hardship and an installment agreement unless it permits the levy to continue. A release generally does not extinguish the underlying debt. Related guidance: back taxes.