IRS Wage Garnishment

IRS Wage Garnishment

IRS Wage Garnishment

When a taxpayer falls behind on their tax bill, they may face harsh penalties from the IRS. When tax bills go unpaid, fees and interest can be added. Plus, the IRS has the authority to take collection actions against taxpayers. Collection attempts can include liens, levies and wage garnishment. With an IRS wage garnishment, money is deducted from a taxpayer’s pay. This money is sent directly to the IRS by the taxpayer’s employer.

The IRS has full authority to legally seize a person’s wages in order to satisfy the back-tax debt. By law, the IRS can only take so much from a person’s pay. However, that amount can still be significant and is determined by various factors. The taxpayer facing an IRS wage garnishment will receive a notice prior to the IRS garnishing wages.

When this occurs, it is important not to get angry with the employer. Your employer or the payroll processing department has no control over the IRS garnishment notice and must comply with the requirements set forth in the garnishment order. When ordered to do so, an employer is legally required to withhold a certain amount of money from each paycheck. Those with questions, should speak directly to the IRS or contact a tax professional for assistance.

It may seem scary facing IRS wage garnishment action. However, before the IRS can start taking money from paychecks, there are guidelines they must follow. Understanding these guidelines may help taxpayers to possibly challenge and avoid garnishment. Therefore, it is important to seek help from a tax professional.

First a person’s tax bill must be calculated. The final tax bill amount is determined by filing a tax return or when the IRS files substitute for a tax return for a taxpayer.  In the event that amount goes unpaid, the IRS will send a notice and demand payment for the money owed. If this invoice is not paid and goes ignored, the IRS will send out other urgent notices. If the taxpayer takes no action, thereafter the case will be forwarded to IRS Automatic Collection System, ACS.  The ACS will issue Final Demand for payment. This notice is a Final Notice of Intent to Levy and a Notice of Your Right to a Hearing. This Final Notice must be sent at least 30 days prior to the IRS garnishing wages.

Ignoring all communication and notices from the IRS is the worst thing a taxpayer can do. Avoiding IRS notices or communication makes it look like a person is trying to avoid paying their annual taxes. It is in the best interest of the taxpayer to reach out to the IRS or a tax professional before the Final notices are sent out, so you may be able delay or avoid the government garnishing on your wages.

Talking to the IRS and explaining the situation may help delay the garnishment. During this talk, discuss the different options available. It may be possible to set up a payment plan or if qualified apply for an Offer in Compromise to settle the entire tax bill for less than what is owed. Once the 30-day notices have been received, an appeal (Collation Due Process Hearing, CDP) must be filed to stop the proposed garnishment or collection action. The appeal is just to dispute the IRS collection or Garnishment action and to request Collection Alternative to the action proposed by the IRS Collection unit.

Those struggling with back tax debt and facing IRS wage garnishment may need to seek help from a tax professional. He or she can discuss options on how to stop the garnishment. Plus, the tax professional knows how to negotiate with the IRS and exercise the taxpayer’s appeal rights. It is important to come to an agreement or take necessary actions which is beneficial and in the best interest of the taxpayer.


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