Can I Stop the IRS From Garnishing My Wages?
If you’re delinquent on your tax debt, the IRS has a broad range of powers when it comes to recovering that debt. Unlike a private creditor, the IRS will not even need to sue you before taking aggressive actions against your property. They can place liens on your real estate, garnish your wages, or even levy your bank account.
When it comes to garnishing your wages, the IRS will talk to your employer directly and place the added burden on them to set aside a specific amount each pay period until the debt is paid in full.
At Midwest Tax Relief, we help those with tax debts negotiate settlements with the IRS. Our attorneys can help you avoid an IRS wage garnishment and other aggressive tactics. Contact us today to learn more.
What Is an IRS Wage Garnishment?
While the IRS does not need to obtain a judgment against a debtor in order to enforce a tax debt, it can’t circumvent due process entirely. The IRS will first send you written notice concerning the amount of money you owe. This will include the principal tax balance plus penalties and interest. In addition, there will be a deadline on which this balance must be paid.
This is the appropriate time to speak to a tax attorney. If you are still delinquent after the deadline, the IRS will issue another notice called the “Final Notice of Intent to Levy”. After 30 days have passed the IRS can begin garnishing your income.
How Much Money Can the IRS Garnish?
An average private creditor is barred from garnishing your wages over a certain amount. These limits do not apply to the IRS. The IRS is required only to leave you with a certain amount of income after garnishing your wages.
Federal tax codes include a table that defines specific exemptions. It also defines the amount that is generally necessary for you and your family to support itself. The IRS can, however, garnish up to 70% or more of your income.
How to Stop an IRS Wage Garnishment
Even if the second deadline has elapsed, you still have options for negotiating a deal with the IRS or stifling the garnishment. Below, we will discuss common ways that tax debtors deal with wage levies.
If, during this process, you go to the IRS and tell them that you cannot afford to repay the entire debt immediately, they will generally listen to an offer to repay the tax debt in installments. So long as you can make these monthly payments, the IRS will rescind an order to garnish your wages.
In some cases, the IRS may forgive penalties and interest on a tax debt or allow you to settle the debt for less than the total amount owed. You will need to qualify for the program and, during the application process, the wage garnishment will be stopped.
Financial Hardship Exemption
The IRS will rule that your tax debt is uncollectible if you can show financial hardship. Typically, this will include a major medical event. Also, if you can show that by paying your federal tax debt, you do not have enough money left over to meet the basic needs of your family, the IRS can forgive the entire amount or offer you a settlement that waives a good portion of that amount. In order to do this, you will need to submit your financial information, including income and expenses, to the IRS. They will make a judgment based on your individual situation. An attorney can help you with this process.
This is not a very good option. If you change employers, however, the IRS will need time to catch up to reinstate the garnishment. You are basically kicking the can down the road until the IRS finds you again. It’s an option to keep in mind, however. In addition, you may be able to temporarily quit your job and then begin working later. Again, this will slow the IRS down, but, eventually, they will find you again.
Chapter 7 Bankruptcy
Some delinquent taxes are dischargeable in bankruptcy. Typically, those that are over three years of age and meet other specific criteria. By filing for Chapter 7, you may be able to discharge some of your overdue tax debt. You can talk to a bankruptcy attorney about whether or not filing a Chapter 7 will help you. During the application, your wage garnishments will stop.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, also known as reorganization bankruptcy, will allow you to construct a repayment plan that allows you to repay your debt over three or five year period. Some of your tax debt may be discharged in the process and your debt will be consolidated into monthly payments. Nondischargeable tax debt will, however, survive the bankruptcy. In other words, you will have to continue to make payments on it once your Chapter 13 has completed.
Filing an IRS Tax Levy Appeal
If you have reason to believe that the IRS erred in claiming you owe taxes, you can appeal the garnishment. In addition to buying you some time, it also forces the IRS to prove that you do, in fact, owe the money they claim you owe.
Talk to an Omaha NE Tax Attorney at Midwest Tax Relief
If you need help managing IRS threats, Midwest Tax Relief can go over your case and come up with a solution that you can live with. Contact us today.