Tax Garnishment

Tax Garnishment

Tax garnishment is a legal process that is common in America. In the process, monetary judgment is collected from a defendant on behalf of the plaintiff. Wage garnishment is the most common type of garnishment. In this case, money is deducted directly from the wage or bank account of the debtor. An employer of the debtor becomes a third party in the process and is referred to as the garnishee. A third party might decide to fire the debtor to avoid the garnishment processing. However, this is prohibited by federal law.Understanding the manner in which the Internal Revenue Service (IRS) carries out the process of garnishment is an essential factor to be recognized. The process is used to enforce payment of tax debt and starts with the IRS first sending out a legal notice. The written notice will include the amounts owed together with the taxes, penalties and interests and their due date. When the balances are not paid in full, another final notice known as the ‘Final Notice of Intent to Levy’ is sent out. Garnishment of income starts after thirty days have elapsed from the day the final notice is sent and the balances have not been cleared in full.

The amount of money that can be garnished from someone’s wages by regular creditors is limited by law. However, the limits do not apply to the IRS as the tax code stipulates a certain amount of money that should be left after deductions towards payment of tax debt. The amount garnished should be lower than 25% of disposable income in a week if the figure for the disposable income is higher than $290. Disposable income is the total earnings a person has after all the legal deductions have been made. The amount that can be garnished is also got from any figure that is higher than 30 times the minimum wage in a week. The average minimum wage is ($7.25 x 30) which equals to $217.50. Therefore, a person earning $217.50 in a week will have the excess amount deducted. Although the tax code stipulates some exemptions that can be claimed, there are instances where the IRS can garnish over 70% of your income.

However, there are a couple of ways that the issue with the IRS can be resolved. Making an offer in compromise is one way of stalling garnishment. Based on one’s financial situation, the tax debt can be settled by an amount less than what is owed through making the offer. The process is rigorous and selective, but during the period of the review of the application, garnishment is stopped. Change of employers or temporarily quitting your job are tactics that temporarily stall the IRS. It takes time for the IRS to track down employer changes and update the garnishment. Another resort can be the filling of bankruptcy. However, all these are temporary solutions that offer limited relief. It is best to clear any taxes owed and be on the good side of the IRS or any creditors to avoid garnishment.  Please see some of our services that will help with your tax problems.

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