Wage Garnishment / Tax Levy Frequently Asked Questions (FAQs)
What is a Wage Levy?
- A wage levy or wage garnishment is a legal way the IRS can collect your tax liability without having you directly pay them. The IRS will contact your current employer and tell them that your wages are to be garnished. Your employer will then take a portion of your pay and send it to the IRS and then pay you what is left.
Can a garnishment be stopped once the IRS has started to garnish my wages?
- Yes a garnishment can be stopped once the IRS has started the levy. The IRS would actually prefer you to make some other form of arrangement than to enforce a garnishment. Some options can be to pay the IRS in full, enter into an installment agreement, file for an offer in compromise, get declared uncollectible, file bankruptcy, change employers or quit your job. The most common methods to stop a levy are to enter into an installment agreement, pay in full or file for an offer in compromise.
How much of my wages can the IRS take?
- The IRS does have some guidelines as to how much they can take from you. They try to leave you with enough to pay your required expenses to live but this typically is does not happen. Their guidelines go by the national average of required amounts to live and if your rent is higher than the average, you will be left with an amount not high enough to pay your required expenses. The IRS can garnish upwards of 80% of your wages until they have collected the entire amount of your tax liability.
What kind of wages can the IRS take?
- The IRS can seize salaries, commissions, bonuses, wages, retirement money and pension earnings. If you do not have any of those they will likely try to seize any other property you have.
How can I avoid the IRS from garnishing my wages?
- The best way to avoid a wage levy is to stay on top of all required tax filings and pay all tax amounts owed to the IRS. If you cannot afford to pay the IRS you must come up with another form of agreement with the IRS to ensure that you pay back your taxes. The IRS has many methods available to those taxpayers that cannot afford their taxes, the method you pick depends upon your financial and tax situation.
What are the IRS rules / laws on garnishments? What are my Rights?
- The IRS must send a final notice of intent to levy and notice of your right to a hearing at least 30 days before they can begin to levy your wages.
- The IRS must have assessed a tax liability and sent you a notice to demand payment prior to the levy.
- You must have neglected or refused to pay the amount that was assessed by the IRS.
How can a tax professional help with IRS wage garnishment?
- A tax professional can help more than most people realize in a situation where a wage levy is involved. If the levy has already begun the a tax professional can put a hold status on the levy while they negotiate a tax settlement on your behalf. The hold will be in place the whole time a settlement is negotiated which ensures that you do not have any more money seized. A tax professional will analyze your financial, tax and work situation to come up with the best settlement method for your unique situation. They will ensure that you get back into good standing with the IRS while keeping in mind your financial needs.