What are Wage Garnishments?
A wage garnishment is a process where a state court mandates an order requiring your employers to withhold a certain amount of your paycheck and direct the finances to the creditor whom you owe money until your debt is resolved. However, the IRS can garnish your wages without having to go through the state court requirements that most other creditors are required to do. Usually an IRS wage garnishment will continue until your debt is paid off. However, there are legal limits on the total amount of your paycheck that can be garnished. Understanding the IRS wage garnishment process can allow you to challenge, mitigate, and even halt IRS wage garnishments.
Some common reasons for wage garnishments include:
- Tax Debts
- Child Support
- Consumer Debts
- Student Loans
When Does the IRS Garnish Wages?
The IRS will give you a number of notices before they begin garnishing your wages. These notices provide taxpayers all the information about the debt owed, including interest, penalties, and taxes that have accrued. On this notice, there will be a date set to which you must pay the amount owed. However, if you fail to pay by the due date, you will receive a notice known as “Final Notice of Intent to Levy” After receiving this final notice, you have 30 days to pay the amount or file a request for a Collection Due Process Hearing before the IRS begins the garnishment process.
How Much Can the IRS Garnish?
When the IRS moves forward with a wage garnishment, your employer must comply with the IRS and withhold a portion of your wage. The IRS takes into account several factors to determine the amount of money they will garnish from your wage, including filing status, standard deduction, number of dependents, etc. The IRS does not take into account your actual expenses when determining how much to garnish from your salary. State taxing authorities and other creditors can withhold a maximum of 25% of your paycheck. However, the IRS wage garnishment could be over 50% of your paycheck. If you have a second job, the IRS has the authority to garnish 100% of your wage from that job.
How Can I Stop IRS Wage Garnishments?
Most states will agree to lower or modify the amount of state wage garnishment if you can show hardship. The IRS will usually agree to stop a wage garnishment with an IRS Installment Agreement. Usually, the IRS Installment Agreement payment is less than the monthly wage garnishment. The IRS could also agree to stop garnishment for a different kind of tax resolution (settlement) that falls under the IRS Fresh Start Program. Other tax resolutions that can stop an IRS garnishment include an Offer in Compromise and Currently Non-collectable (CNC) Status.
What is Offer In Compromise?
Through the Offer In Compromise repayment plan, a taxpayer will only be required to pay a percentage of the outstanding tax debt owed. It is a legitimate option if you’re struggling to pay your full tax liability. The goal of this repayment option is to find a compromise that suits both the taxpayer and the Internal Revenue Service (IRS). It is important to note that submitting an application does not ensure that the IRS will accept your offer. The IRS takes into consideration a number of factors, including your income, expenses, asset quality, etc. If you want to make an Offer In Compromise to the IRS, it is critical that you make a reasonable offer, one that precisely reflects your financial situation. Therefore, it would be wise to contact a tax professional to assist in the submission of your offer.
What is the Installment Agreement Plan?
The Installment Agreement allows you to stretch out your IRS back tax payments and make small, incremental payments, rather than paying it all at once. Your monthly payment will be determined based on your financial status, which includes your income, assets, etc. These payments are designed to be affordable so taxpayers can make payments on time, without facing financial hardships each month.
What is Non-Collectable Status?
This is a status assigned to taxpayers whom the government has deemed unable to pay their tax debt. This will temporarily pause the IRS collection process. This means you will not receive any threatening letters, phone calls, and/or levies until your current financial situation improves. The IRS will agree to a non-collective status only if the taxpayer has demonstrated that they are in economic hardship.
Do you qualify for any of these federal tax resolution (settlement) programs?
Coast One Tax Group can stop an IRS wage garnishment! Our team is experienced in assisting individuals in successfully navigating through IRS wage garnishments. We are a group of experienced attorneys, accountants and enrolled agents representing taxpayers before state and federal taxing authorities. We will negotiate a resolution to your IRS wage garnishment. Our goal is to stop IRS wage garnishment and resolve your tax problem as quickly as possible. Call, text, or email Coast One Tax Group today for a free consultation!
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