Tax garnishments are a powerful tool the IRS uses to collect from taxpayers who have not paid their tax debts. When your wages are garnished your employer will take a portion of your paycheck and send it directly to the IRS. The idea of a tax garnishment is intimidating to most Americans and often just the threat of garnishment is enough to get a delinquent taxpayer to work with the IRS to resolve their tax debt.
Fortunately, if you have received a notice that the IRS is going to garnish your wages, you have options for resolving your tax debt before the garnishment begins. If the IRS is already garnishing your wages, there are ways to work with the IRS to settle your tax debt to get the garnishment lifted.
What is a Tax Garnishment?
A tax garnishment is a legal order directing an employer to seize a portion of your wages and send them to the IRS to satisfy a tax debt. While most creditors to whom you owe money can go to court to request that your wages are garnished, the IRS does not need to get a court’s permission to begin a tax garnishment.
Most wage garnishments are a matter of public record and can appear on your credit report, but an IRS tax garnishment will not because the IRS cannot report delinquent taxpayers to the credit reporting agencies. Additionally, your employer cannot fire an employee over a first-time wage garnishment.
Is The IRS Garnishing My Wages?
If the IRS is garnishing your wages it should not come as a surprise to you. The IRS is not allowed to garnish your wages without first giving you notice and the chance to make payment arrangements to stop the garnishment.
The IRS will garnish your wages under a levy, which allows it to seize your property–including your paycheck–to repay your tax debt. Before the IRS issues a levy, the following must happen:
- The IRS determines that you have unpaid taxes
- The IRS sends you a Notice and Demand for Payment
- You do not pay the tax you owe
- The IRS issues a Final Notice of Intent to Levy and a Notice of Your Right to a Hearing at least 30 days before it take effect
Not all IRS levies lead to wage garnishment because the IRS can choose among a number of options to determine how to most effectively force you to pay what you owe. If it finds that it would be more effective to take steps like seizing your assets or placing liens on your property, it may choose not to garnish your wages.
Why Are My Taxes Being Garnished?
The IRS is only allowed to garnish your paycheck if you have unpaid taxes and it has sent you several notices asking you to pay. If you fail to respond to the notices–or ignore them–the IRS can file federal tax liens and issue levies, which may include wage garnishment.
How Much Will The IRS Garnish From My Wages?
The IRS can’t seize your entire paycheck. Some of your wages are exempt from garnishment and will still be paid to you each pay period. Your exempt wages are calculated based on the standard federal deduction and the number of dependents you were allowed the year being levied.
Before it begins garnishing your wages, the IRS will send your employer Publication 1494, which has tables for figuring out the amount of your wages or salary that is exempt from garnishment. For example, if your filing status is married filing jointly, the base exemption amount for 2021 is $482.69 each week, plus $82.69 for each dependent. That means if you are married with two dependents and file a joint return you can exempt $648.07 from garnishment each week.
Your employer should also provide you with a Statement of Dependents and Filing Status that you must complete and return within three days. If you fail to return the statement within that time the IRS will calculate your exemption as if you were married filing separately and have no dependents.
How to Stop the IRS From Garnishing Your Wages
When the IRS begins garnishing your wages, it will continue to do so until one of the following occurs:
- You make other arrangements with the IRS to pay your delinquent taxes, such as making an offer in compromise or setting up installment payments
- You pay the full amount you owe
- The levy is released by the IRS
One way to get the levy removed is to convince the IRS that it is causing financial hardship. If the IRS ends the levy due to your financial hardship you will still need to pay off any remaining balance, but the IRS will work with you to set up a payment plan or take other steps to pay the balance.
In some cases you can get the garnishment removed by applying for the IRS’s Fresh Start Program for people with tax debts of $25,000 or less. To qualify for the program you must also:
- Agree to automatic payments
- Not be default on an installment agreement and have made at least three consecutive payments
- Have complied with all of your tax return filings and are current with your estimated tax payments
Finally, declaring bankruptcy will force the IRS to stop garnishing your wages and release any tax levies against your property and either make arrangements to pay it off during bankruptcy or, in certain circumstances, have the tax debt forgiven.
Solutions for IRS Wage Garnishment Help
The IRS gives you 30 days from the Notice of Intent to Levy to file a formal appeal. The appeal temporarily stops the IRS from implementing the levy until the appeal has been resolved.
Appealing an IRS levy can be a fairly straightforward process, but the IRS is not required to reverse its decision to levy your assets. To give you the best chance of succeeding in an appeal it is often a good idea to seek the assistance of an experienced tax professional to ensure that your appeal has the best chance of succeeding. A skilled tax professional may help you find problems with the IRS’s levy process requiring it to remove the levy or assist in documenting how the levy would create a financial hardship.
Contact Us for Tax Garnishment Help
If you are facing an IRS tax garnishment of your wages, the skilled tax professionals at Hillhurst Tax Group may be able to help. If you have received notice that the IRS will garnish your wages our experienced staff can help you weigh your options and work out an arrangement with the IRS to resolve the issue before the government starts pulling money from your paycheck. If you are already subject to a tax garnishment the Hillhurst Tax Group will work with the IRS to get the garnishment released while protecting as many of your assets as possible. Contact us today for a free consultation at [email protected] or (323) 486-3314.