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A wage garnishment is legal procedure by which the IRS seizes a taxpayer’s income directly from the taxpayer’s employer. Wage garnishments occur only against W-2 wage earners and are continuous in effect. Therefore the IRS does not have to re-issue a wage levy in order garnish every paycheck of an employee. wage garnishment usually takes up to 85% of an employee’s paycheck. Self employed people (who earn 1099s) can also be levied, however the IRS is required to re-issue a levy notice prior to every single payment of income for self employed people.
How can an IRS wage garnishment be STOPPED?
IRS wage garnishments can literally lead to life and death situations for taxpayers. The IRS can seize so much money out of a taxpayer’s paycheck that a taxpayer may not be able to pay for housing, food, transportation and medication. As such, stopping an IRS wage garnishment is almost always a top priority. In stopping a wage garnishment, there short term fixes and there are long term fixes. In the short term, a taxpayer can have a wage levy stopped by promising to pay the IRS in full with borrowed funds from family, friends or other legitimate sources. Another short term fix can occur when a taxpayer is placed on an installment arrangement with the IRS. The long term solutions for resolving a wage levy include completing missing tax returns, submitting an offer in compromise, enforcing statutes of limitations on the IRS, and filing for bankruptcy. Different types of tax problems will require different types of solutions in resolving a wage garnishment.
How does the IRS wage garnishment process work?
The IRS will not surprise a taxpayer with a wage garnishment. Initially, a taxpayer will receive a notice of past due taxes along with a request for immediate payment. If this notice is ignored and unanswered, a taxpayer will eventually receive a “Final Notice of Intent to Levy”. Usually, after 30 days of the final notice the IRS will issue Form 688-W to a taxpayer’s employer and the garnishment of wages begins. Taxpayers are afforded some exemptions for dependents on Form 668-W, but the allowance is so small that effect of the wage garnishment is still devastating on a taxpayer’s personal financial situation.
What If I Want to Appeal an IRS wage levy or wage garnishment?
A “Final Notice of Intent to Levy” can be appealed within 30 days. Good cause for the appeal is required and some examples are set forth below:
- You paid your taxes in full and they made a mistake;
- You are in bankruptcy and an injunction or automatic stay was issued;
- The statute of limitations on collecting the taxes applies;
- You submitted an Offer In Compromise and have not received an approval or denial decision yet;
- You are already in an IRS Installment Agreement upon which you have not defaulted;
- You have filed all of your tax returns and have unreasonably been denied an installment arrangement.
What Should You Do If You Are Facing or Experiencing an IRS Wage Garnishment?
Upon receiving a notice asking you to pay your back taxes, or a note of “intent to levy”, you should immediately begin to consider all your options and contact the IRS. If you are unsure of how to pay the IRS get in touch with a tax lawyer. It is better to have an experienced person on your side than it is to ignore the requests and wait for the worst to come. Even if you are currently experiencing an IRS wage levy now, contact a tax attorney so they can resolve your situation quickly and efficiently.
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