IRS Income Garnishing: What is it, How Does it Work, and How to Stop It

Is the IRS Garnishing Your Income?  Call our New York City Tax Resolution Lawyer

A garnishment is a court order that requires an individual’s money or property to be seized to satisfy debts owed to creditors.  The Internal Revenue Service (“IRS”) commonly utilizes its garnishment power in order to settle owed taxes and debts, typically by garnishing one’s wages.  Here, they have the ability to require your employer to direct portions of your paycheck to the IRS itself, including your salary, bonuses, or commissions.  IRS income garnishing can become debilitating for this reason.

This means that your employer will be legally required to comply with the garnishment once they have received notice, which will generally happen within one pay period.  Although most creditors may garnish one’s money or property, the garnishment process of the IRS differs in two main ways.  First, the IRS is not required to get a court ordered judgment in their favor to garnish your wages.  Second, the IRS is legally allowed to seize more of your wages than other types of creditors.  However, enlisting the help of a tax resolution attorney can help in a number of ways, including lower settlement prices or terminating the garnishment.

How the Garnishment Process Works

If the IRS has decided to garnish your wages, you will first be sent a written notice setting out the debts or taxes owed, as well as any interest or penalties that may have accrued.  The notice will also contain a due date for when the amount must be paid in full.  In the event that you are unable to pay the full amount by that date, which is true of money people who have had their wages garnished, you will then receive your “Final Notice of Intent to Levy.”  This second notice essentially gives you an additional 30 days to pay your debts.  If after the thirty day period has run you have still not paid the debt in full, the IRS will begin the process of garnishing your hard earned income.

As mentioned above, the IRS is legally allowed to garnish a higher amount of your wages than general creditors.  When calculating the amount of income to garnish, the IRS looks to the tax code, which will dictate how much of your paycheck you will be allowed to keep.  The tax code sets out a table that takes into account both the exemptions claimed on your taxes and the amount of money required for your household to afford basic necessities.  Some people may lose 70% or more of their paycheck in the event of a garnishment.

How to Stop an IRS Income Garnishing

Preventative measures are the best way to protect your income from being garnished by the IRS.  Common examples of these measures that a tax resolution attorney will suggest to avoid garnishments include the following:

  • Pay Your Debt in Full:  Paying your debt in full within the two notice periods is the easiest step to stop the garnishment process before it reaches your paycheck.  However, if this is not financially possible for you or your family, there are other potential solutions.
  • Speak with an IRS Agent Immediately:  You should respond immediately to the IRS upon receipt of a garnishment notice by calling an IRS agent.  Voluntarily communicating with the IRS shows your attention to the issue and speaking with a person on the phone will make it much more likely that they will negotiate a deal with you.
  • Negotiate a Settlement:  Sometimes, the IRS will allow for what is called an “offer in compromise.”  Here, they may offer to lower your debt based on what you are financially able to pay.  Oftentimes these negotiations can be complex and convoluted, so you may benefit from having additional help.
  • Request a Payment Plan:  Many taxpayers are unaware that the IRS will offer debtors a payment plan in lieu of a lump sum payment.  This “installment agreement” allows you to pay off your debt in a financially reasonable way without first reaching your income.
  • Bankruptcy:  Declaring bankruptcy to avoid wage garnishment should only be considered in circumstances where there is no other reasonable alternative.  Although it may stop your income from being garnished, it will have serious repercussions for you in the long run, such as a longstanding effect on one’s credit score.

Are Your Wages Being Garnished?  Call Our New York City Tax Resolution Lawyer to Learn How We Can Help

There is a lot that goes into tax resolution and it can be a complicated maze with many pitfalls.  Call our experienced attorneys at SAMUEL & STEIN today to learn how we can help you successfully navigate this matrix of tax laws and achieve financial freedom by dialing (646) 681-4193 or use the convenient “Evaluate Now” box on our webpage.  Together we can help answer your questions and protect your rights.

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