IRS Wage Garnishments

The IRS uses Wage Garnishments to collect taxes owed. Once a garnishment is filed, the taxpayer’s employer is required to collect a large percentage of each paycheck. The wage garnishment stays in effect until the tax is fully paid or until the IRS agrees to release the garnishment. Of course, the IRS Wage Garnishment can be financially devastating to the taxpayer.

We at Centsable Accounting understand how devastating a tax garnishment is to taxpayers, especially those with families. A number of our clients turn to us for help in emergency situations regarding wage garnishments because we can stop wage garnishments and help to resolve tax problems quickly. In addition, we follow-up to make sure a long-term strategy is in place for dealing with tax bills. Our tax resolution specialists work hard to help our clients' both in regard to wage levies, garnishments and other tax problems.

Frequently Asked Questions regarding WAGE GARNISHMENTS / IRS LEVY

1. What Exactly is a Levy or Garnishment?

Answer: To collect on overdue taxes, the IRS uses a Levy or Wage Garnishment. It is a way of ensuring that they are paid by taking funds directly from your paycheck or other resource.

2. What happens if you do not pay your taxes (or make arrangements to settle your debt)?

Answer: If a taxpayer does not pay his or her taxes the IRS has the authority to seize and sell any type of real or personal property a taxpayer owns. If the taxpayer does not arrange to settle a debt with the IRS, the IRS can confiscate and sell cars, boats or houses. The IRS can also levy property which is held by someone else, such as wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables or the cash loan value of life insurance or commissions.

3. When does the IRS levy or garnish wages?

Answer: There are three instances when the IRS levies or garnishes wages. (1) If the tax has been assessed and the taxpayer has been notified of a demand for payment. (2) If a taxpayer has neglected or refused to pay taxes. (3) If the IRS has sent a Final Notice of Intent to Levy and Notice of Right to a Hearing as least 30 days prior to the levy. The IRS may give the taxpayer notice in person, leave it at the taxpayer’s home or business or send it to the last known address by certified or registered mail.

4. What is the typical dollar amount garnished or levied from a taxpayer’s check?

Answer: Although the amount is formula driven, the usual amount levied or garnished is 30 to 70% of the gross paycheck.

5. Can either a wage garnishment or wage levy be appealed?

Answer: In most instances, clients can request a Collection Due Process hearing with the Office of Appeals. But grounds for appeal of wage garnishments must include the following:

Taxpayer has paid all taxes owed prior to receiving the levy notice
IRS assessed the tax and sent the levy notice while the taxpayer was in bankruptcy
The IRS made a procedural error in assessment.
The Statute of Limitations expired before the IRS sent the levy notice
Taxpayer didn’t have an opportunity to dispute the liability.
Taxpayer requests the opportunity to discuss collection options
Taxpayer wants to make a spousal defense.

6. What generally occurs at the end of the appeals hearing?

Answer: At the end of an appeals hearing, the Office of Appeals then issues a determination. The taxpayer has 30 days to bring a suit to dispute the determination. If the taxpayer’s property is levied or seized, the taxpayer may contact the employee who took the action. A taxpayer may also request a review of the case by the manager. If the matter is still unresolved, the manager can explain the taxpayer’s rights to appeal to the Office of Appeals.

7. When does an IRS levy of wages end?

Answer: An IRS levy ends when the levy is released, the taxpayer pays his or her debt or the time expires for legally collecting the tax.

8. How can I stop wage garnishments?

Answer: Read our article on stopping wage garnishments or contact us for a free consultation.