What is an IRS Wage Garnishment?

A wage garnishment from the IRS or other tax authority is put in place when a taxpayer owes back tax or has other tax issues and the IRS is no longer willing to wait for the money.

This method is not simply a torture device of the IRS, rather it is a technique used to bring a taxpayer back into what the IRS considers to be compliance with the tax laws. Property levies, bank account levies and wage garnishment are typically used to get a taxpayer's attention quickly to motivate them to act.

Wage garnishment is used on salaried employees and can impact not only the amount they net from their paycheck, but can have stinging social ramifications and even threaten a person's job.

If you have a tax issue, the IRS has the right to seize any real property or personal property. Real property might include a home or other physical asset. Personal property can include money held in bank accounts, saving accounts, or, in this case, your paycheck. IRS wage garnishments are considered personal property seizures.

Before initiating a wage garnishment, the IRS is going to let you know what it plans to do. You will be sent a notice of past due taxes and a demand to pay within 10 to 30 days. If you cannot pay the taxes, this is the time to contact the IRS to arrange for a payment plan. 

If you do not contact them, their next step is to send a “Final Notice” of intent to levy. Included with this is a notice of your right to a hearing. Thirty days after this notice, the IRS will move forward with the wage garnishment.

The IRS comes to an amount for the wage garnishment based on a formula that includes the total tax owed, the number of dependents you claim and a few additional elements. This figure could be between 30 to 70 percent of each paycheck. For example, if you receive a gross paycheck of $2,000 twice a month, the IRS could take $1,000 of the gross check if the wage garnishment is for 50% of the check. A wage garnishment remains in effect until the taxes are paid off or the garnishment is released. Because your employer is responsible for making the payment, there is no way to hide from this. Unfortunately, because of the extra paperwork, some employers have been known to terminate employees who have wage garnishments in which case you lose your source of income.

If this sounds scary, it's because it is.

Getting an IRS Wage Garnishment Release

The good news is that the ultimate objective of a Wage Garnishment is to bring you back to the tax paying system. While the IRS wants the taxes repaid, it also wants you to make regular payments in future years. With this in mind, a tax professional can help you to get a release on an IRS wage garnishment.

A few important points:

• IRS agents are very good at getting information from emotional taxpayers.
• Everything you say is recorded and may be used against you in future conversations.
• A tax professional is experienced at talking to IRS agents and is not going to provoked to react emotionally.
• At AmeriPride we have been able to successfuly lower or completely terminate wage garnishments for certain clients.
• Getting an IRS Wage Garnishment Release is only one step to take when dealing with tax issues.

 

The most important thing to know is that you have options.

Contact AmeriPride Tax Group today.