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Wage Garnishment

What You Need to Know

An IRS wage garnishment is part of the IRS levy process and is permitted by the Internal Revenue Code. When a taxpayer ignores the IRS notices about taxes owed, the IRS can levy property, including wages.

The levy notice is sent to the employer, and monies are withheld from the taxpayer’s paycheck and sent directly to the IRS. A federal tax levy must leave the taxpayer with some income for living expenses, while many state tax levies do not.

Wage garnishments are not just about the money deducted from your paycheck. They involve a complex interplay of federal laws, state laws, and individual rights. When an employer receives a garnishment order, they are legally bound to withhold a portion of the employee’s wages and send it directly to the creditor, be it the IRS or other federal agencies.

This process can continue over several pay periods until the debt is fully paid. It’s essential to understand that wage garnishments are not voluntary wage assignments, which are agreements between the debtor and the creditor. Garnishments are enforced, often without the debtor’s consent, as per the US Department of Labor.

Specialized Strategies for Wage Garnishments

Wage garnishments aren’t merely a pinch on your earnings; they’re a loud and clear message from the IRS that can cause financial and emotional strain. But, with Amity One’s expertise, you can regain financial control and peace of mind with the help of a team of tax professionals.

Defending Your Earnings

At Amity One, we understand the intricacies of tax laws and the IRS’s levy processes. Our team of dedicated tax professionals will work with the IRS to find a solution tailored to your financial situation and explore every avenue to half the wage garnishment process.

What is IRS Wage Garnishment?

Wage garnishment is an extreme tactic used to collect taxes. It permits the IRS to seize money and property from you. The IRS can take your wages and cash from your bank or financial accounts, attach your Social Security or Pension, and sometimes seize vehicles, real estate, or personal property to pay your outstanding tax debts.

The IRS doesn’t need to go to court to garnish your wages. They issue a levy and contact your employer (IRS Notice 668-W), requiring them to send all but a portion of your wages to the IRS. A wage garnishment stays in place until your debt is paid or until it is released using the appropriate remedies. Your employer is required to wait one pay period before implementing a garnishment.

Usually, the first communication will be a letter stating how much you owe. The amount owed will include penalties and interest. The letter will advise you of a date to pay the balance or make. other arrangements. If you cannot pay or fail to respond, the IRS will send additional notices with increasingly hostile threats.

If you continue to ignore these notices, you will receive a “Notice of Intent to Levy,” the last step before a wage garnishment. If you are assigned to a Revenue Officer, they can come to your house or place of work.

How Much Money Does the IRS Take?

The IRS can take most of your money. The exact amount is calculated by determining what portion of your wage is exempt. Here’s an illustration: hypothetically, if you have $500 in exempt income and make $1000 weekly, the IRS will take $500. If you make $2000 with $500 exempt, they will take $1500, and so on.

This table from the IRS will tell you how much money you will be allowed to keep, it is usually 25-50% after all the legally required deductions, including Social Security.

How Does Wage Garnishment Affect You?

The immediate effect is reduced take-home pay, which can strain one’s ability to cover monthly expenses. This decrease can significantly strain an individual’s financial situation, making it challenging to manage monthly expenses, from rent and utilities to groceries and transportation.

While this is typically a measure taken after multiple other collection attempts have been exhausted, it can have repercussions beyond just reduced income. This can adversely affect one’s credit score, potentially jeopardize current and future employment, and have lasting implications on one’s overall financial health and stability.

How Can You Stop an IRS Wage Garnishment?

An IRS tax garnishment continues until you pay off your debt, the statute of limitations ends on your tax liability, or the IRS removes your wage garnishment. If you are able to pay your federal tax debt in one large payment amount, this is the fastest and easiest way to remove any tax garnishment.

However, most people cannot afford a payment, which is why the garnishment has happened in the first place. Instead of paying such a large sum at once, you have other actions to take. You can apply for an Installment Agreement.

With this tax solution, you pay a monthly amount towards your tax liability. You get to choose the amount, within reason, rather than the amount forced upon you by the IRS, which occurs with a garnishment.

With this option, you will have more of your paycheck for your monthly expenses beyond just paying off your tax debt. If you cannot afford to pay your tax debt, you can also apply for an Offer in Compromise, where you negotiate with the IRS about how much you pay.

How Amity One Tax Helps Remove a Tax Garnishment

Stopping Wage Garnishment from the IRS can be difficult, but we’re here to help. We’re equipped with understanding and experience when it comes to IRS policies. The following is directly from the IRS website.

If the IRS levies (seizes) your wages, that money is sent to the IRS each pay period until:

  • You make other arrangements to pay your overdue taxes.
  • The amount of overdue taxes you owe has been paid.
  • The levy is released.

Unless the IRS agrees to some resolution, only a few options can force the IRS to stop your garnishment:

  • Pay your tax debt in full.
  • The statute of limitations expires.
  • You file for bankruptcy protection (this may not erase your tax debt).
  • You submit for an Offer in Compromise or a payment plan.
  • You show a “hardship” via financial documentation.

If you’re having a hard time dealing with these, you can simply let the expert handle it for you. For more information, call us at 866-274-0343, and our tax experts can help answer your questions.

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