IRS Wage Garnishment
IRS wage garnishment occurs when you owe taxes and the IRS is no longer willing to wait to collect them. Here’s information on this nightmare and how to deal with it.
If you fail to pay taxes in the United States, the IRS has some very aggressive tools to use against you. It is important to understand, however, that the goal of the IRS isn’t to make your life living hell. Instead, the IRS is trying to get you back into the tax payment system. To accomplish this goal, the IRS uses tools such as property levies, bank account levies and wage garnishment. Separate or together, these methods will quickly get your attention and bring you to your knees if you don’t do anything about them.
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For salaried employees, the wage garnishment is a favorite tool of the IRS. Nothing, and I mean nothing, will bring a delinquent taxpayer to their knees faster than an IRS wage garnishment. Let’s take a closer look at this hammer used by the IRS.
If you owe taxes, the IRS has the right to seize any real property or personal property you own. Real property includes things such as homes. Personal property includes categories such as money held in bank accounts, savings or your paycheck. IRS wage garnishments are considered personal property seizures.
In pursuing an IRS wage garnishment, the IRS is going to let you know it is coming. First, the IRS is going to send you a notice of past due taxes and a demand that you pay them with 10 to 30 days depending on the type of tax. If you fail to pay the taxes, you should contact the IRS to arrange a payment plan. If don’t contact the IRS or pay the taxes, the IRS will send a “Final Notice” of intent to levy and a notice of your right to a hearing on the issue. Thirty days after this notice, the IRS will move forward with the wage garnishment.
The amount of the IRS wage garnishment is determined by a formula calculating the tax owed, the number of dependents you claim and other issues beyond the scope of this article. Generally, you can expect the IRS to come up with a figure equivalent to between 30 and 70 percent of each of your paychecks. For example, if you receive a gross paycheck of $1,000 every two weeks, the IRS will take $500 of the gross if the wage garnishment is for 50 percent of the check. This will occur with every paycheck you receive until the tax debt is paid off and the employer is responsible for making the payment, which means you can’t try to hide your paycheck. Pretty scary, eh?
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Returning to our earlier theme, the real goal of the IRS is to get you back into the tax paying system. While the IRS certainly wants the back taxes, it also wants to get you caught up on taxes and making regular payments in future years. This goal gives you a method to negotiate away the IRS wage garnishment.
While you can negotiate with the IRS on your own, it isn’t recommended. Everything you say can be used against you and the IRS agents are very good at interrogating taxpayers. A much better way to go is to hire a tax attorney or professional to handle the matter for you. A good tax professional should be able to get the IRS to significantly lower or completely terminate the wage garnishment in exchange for a payment plan. In certain situations, the tax professional may recommend pursuing an offer in compromise wherein the IRS will agree to eliminate or dramatically lower your tax debt. Obviously, any of these situations represents a major improvement over having your wages garnished.
It doesn’t really matter what steps you take, so long as you take action. A tax professional may be able to get rid of the IRS wage garnishment in as little as 48 hours.