If You Owe Taxes To The IRS

They have the power to issue a levy or file a lien on your assets. A certain type of levy is wage garnishment. When a wage garnishment is imposed, the money will be deducted from your wages each pay period. Before the IRS can start garnishing your wages there are certain rules they must adhere to first. With a trained tax firm, such as Omni Tax help, we can help you understand the rules when it comes to an IRS wage garnishment. Knowing your rights can help you prepare for the garnishment to take place. It can also give you the option to challenge the action or stop it before it happens.
Wage Garnishment
Wage Garnishment

First Notice Process and Time Period For Additional Notices

When the IRS calculates that you owe a tax liability to them, you will receive your first notice along with the Demand for full payment. The demand for payment will request that you pay the entire amount of the tax due, immediately. If you do not respond or fail to pay the amount, the IRS will issue several other notices until it sends out the Final notice. This notice will be a CP504, Final Notice of Intent to Levy and a Notice of your right to a hearing. Once you have received the final notice, the IRS will include a deadline date of about 30 days for the request of a hearing to be made. In some cases, if the IRS does not receive a response within 15 days after the deadline, they begin to garnish your wages.

On top of garnishing your wages the IRS can also levy your bank accounts, business account receivables or social security income. To avoid these actions, you should contact the IRS and try to correct the issue as soon as possible. Most of the time you will be able to call and request an Installment Agreement that day in order to satisfy the past due tax debt. Once your account is on a payment plan it shows that you have made arrangements towards paying your liability.All levies will stop when your account is in compliance.Having a resolution in place on your account will stop the IRS from pursuing other means to collect the amount due.

What Can You Do, Once The IRS Has Issued a Levy Against Your Wages?

If the IRS has issued a wage levy on your account, the request will be sent directly to your employer. Your employer cannot argue this action. They must submit a portion of your wages to the IRS to pay your tax bills. The IRS has more power than any other debt agencies. This means that they can take precedence over another garnishment and request that the highest amount be withheld each pay period. They are not held to the same state and federal limits that other creditors are. The IRS can garnish your wages and all that the tax code requires them to do is leave enough money that they deem necessary for you to pay basic living expenses. Part of your wages can be exempt from the IRS wage garnishment. To determine the exempt amount the IRS will take into consideration
Wage Garnishment

You Must Report Two Things.

  1. The Standard Deduction, also known as your filing status
  2. The number of dependents you have.

Each year that a levy is issued will be determined separately. This is because there can be a difference in your filing status and dependents claimed in a year. When your employer receives the levy notice from the IRS it will also include a Publication 1494. This publication will have a tax table for your employer to use when figuring the amount of your wages that could be exempt from the levy. Your employer must provide you with a Statement of Dependents and Filing Status form to complete and return within three business days. It is important that you do not wait until the last minute to fill out this request because the IRS can determine the exempt amount for you. If they make the determination for you, they will assume your exempt amount as married filing separate with no dependents. This will put you in the highest tax bracket available. This will also mean that your exempt amount will be minimal.

For example,  A person who is claiming head of household and has two dependents, the IRS is only required to leave $542.03 of your weekly paycheck. That means that if you get paid $1,300.00 a week, the IRS will take $757.97. If they calculate your exempt amount as Married Filing single with no dependents then out of $1,300.00 a week, the IRS is only required to leave $238.46. That means that $1,061.54 will be taken.

Unless the IRS agrees to a resolution on your account,the wage garnishment will remain in effect

Until the tax balance plus any penalties and interest is paid in full. The IRS will also keep any future tax refunds you have and apply them to the past due balance. Outside of setting up payment plans there are different scenarios that could release a wage garnishment. If your Collection Statute Expiration Dates, or CSED’s, have expired, the IRS will have to release the garnishment. A Collections Statute Expiration Date is figured for each year that a balance is present. The IRS has until to that expiration date to attempt to collect money in order to satisfy the taxes owed. Usually these dates are 10 years from the date your tax return was filed. If you file bankruptcy, then that would be a qualifying event that would remove the wage garnishment. Keep in mind that tax debt is not usually discharged in bankruptcy. The reason a wage garnishment would be released during bankruptcy is because you can prove a financial hardship.

What Is Needed To File an Appeal?

When the Final notice is issued stating that a levy is proposed then in order to have the levy released you must file an appeal. Your appeal rights will be included with the Final Notice of Intent to Levy, CP 504. You will have 30 days from the original date of the notice to file this appeal. This appeal is known as a Collection Due Process (CDP) hearing. Once you file the appeal you will have the chance to prove to an appeals officer that the wage garnishment could pose a financial hardship for you and your family. On the basis of a financial hardship, wage garnishments are usually released. During this appeal process you will only be required to appeal the fact that the wage garnishment was placed. It would not be the time to dispute your whole tax balance or other issues that may be present.
Wage Garnishment

If you think that you are in jeopardy of having your wages garnished by the IRS, you should contact an expert tax professional immediately. Omni Tax Help specializes in negotiation with the IRS. We take any type of levy action seriously. We will work hard on your behalf to secure your assets and wages. If your account has hit the stages of wage garnishment then it means that other aggressive collection actions are not far behind. This could include bank levies and seizure of your property.

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