Wage Garnishment

If the IRS has allowed you sufficient time to settle your debt or establish alternative arrangements without success, they will inform your employer to deduct a designated percentage from each of your paychecks until the entire debt is satisfied.

Failure of compliance by your employer could lead the IRS to hold them personally accountable for your tax debt. Typically, the IRS grants your employer just one pay cycle to fulfill this requirement.

A wage levy occurs when the IRS deducts money directly from your salary to settle unpaid taxes. IRS wage levies are particularly known for being a forceful action, and it is advisable to seek assistance from a enrolled agent, or tax attorney before your wages face levy.

If the IRS takes a portion of your income to address your tax obligations, you might find yourself with insufficient funds to meet your daily living expenses. While the IRS permits individuals to maintain some money for essential expenses, this allowance is typically minimal. Facing wage garnishment, especially if you’re accustomed to relying on your entire paycheck, can lead to significant financial challenges.

Clearly, having extra funds deducted from your salary can pose a significant financial burden. Unlike conventional creditors, there are no regulations restricting the IRS from deducting a substantial amount from your paycheck to settle your tax debt. The deduction is determined based on factors such as the number of exemptions and other details from your latest tax return. This garnishment normally averages 20% – 50%, although in certain situations and by law could reach as high as 70% (not common) of your take home income.

An IRS wage garnishment shouldn’t catch you off guard. Why, because before executing the garnishment action, the IRS will provide you with a Final Notice of Intent to Levy and Notice of Your Rights to a Hearing, with a minimum of 30 days’ notice before the levy takes effect. To guarantee you receive the notice, the IRS will either deliver it in person, send it via registered mail to your last known address, or leave it at your business location.

The IRS will notify you through a Third-Party Contact Notice, informing you of its intention to communicate with a third party, such as your employer. Subsequently, your employer will receive a Notice of Levy on Wages from the IRS, leading to the deduction of your wages in the following pay period.

Your employer will be furnished with IRS Form 668-W, commonly known as the Notice of Levy on Wages, Salary, and Other Income, to facilitate the wage or salary levy. It is mandatory for the employer to adhere to the levy and remit the specified amount to the IRS. Additionally, the employer may be obligated to furnish the IRS with details regarding the employee’s health insurance coverage. Failure to comply with the levy could result in penalties for the employer.

If you work for yourself (self-employed) the IRS cannot seize your wages by typical means (through your employer). Meaning, they might freeze your bank account or pursue alternative income sources. To prevent reaching this stage in the wage garnishment process, reach out to Tax Service Masters and ask about Tax Resolution, be sure to emphasize the fact that your wages are, or are about to be garnished.

The first step we’ll take is to contact the IRS, inform them we are representing you and then check for compliance and what steps need to be taken for you to achieve compliance. If compliance is not a factor, we’ll move ahead with the resolution options available, which will be determined after an initial discovery. All options are discussed with you (the client) before making arrangements with the IRS. The goal here is to achieve a win-win relationship between you and the IRS.

Utilizing Tax Service Masters, and our Tax Resolution experience make a difference, we have the capability to engage in negotiations on your behalf, putting a stop to wage garnishments. Our Enrolled Agents will communicate a strategy that ends garnishment on better terms.

Often, potential clients come to us seeking assistance in halting IRS wage garnishments. Upon reaching our office, you’ll speak with a tax professional who gathers and assesses your situation. Given that our Enrolled Agents have experience working with taxpayers and IRS agents, we take on even the most intricate and urgent scenarios in reaching resolutions with the IRS. Our initial examination is complimentary, once you become a paying client, we pinpoint the issue, bring it to your attention and frame a tailored solution. Upon acceptance of our proposal, the subsequent step involves us acting as your representative to communicate with the IRS and cease the wage garnishment.

Many individuals try to stop wage garnishments independently, but may find themselves dissatisfied with the outcomes.

The IRS relies on individuals feeling too overwhelmed to contest their counteroffer, leading many to pay more than they can afford. Our Enrolled Agents possess first-hand experience, we accurately propose solutions that are work for you and are acceptable to the IRS as well. When a taxpayer enlist the services of an agency like Tax Service Masters for representation, it demonstrates to the IRS a sincere commitment to resolving tax debts.

If you’ve tried a DIY Wage Garnishment Release with no success, feel free to reach out or book an appointment to start the stop of your wage garnishment.

There are techniques to cease an IRS wage garnishment action. Keep in mind, unless you can settle the entire tax debt, stopping the garnishment may be a challenge unless you have experience in Tax Resolution. Typically, the most effective approach is to negotiate arrangements with the IRS prior to them initiating wage garnishment. But, if you’re too late and the wage garnishment has taken place, then there are still actions we can take. If your wages are currently being seized, reach out to us immediately for assistance in stopping wage garnishment.

Outlined below we’ll discuss how the IRS can garnish your wages, the notification process for garnishment, and the expectations when your wages undergo garnishment. Prior to diving into these specifics, let’s address your primary concern — what steps can be taken to terminate IRS wage garnishment?

Pay Off the Tax Debt in Full

Although not usually recommended, especially if the balance is unjustified, one clear answer is to settle your entire tax debt by making a full payment to the IRS. Upon complete payment, the IRS will cease the garnishment automatically. If settling the entire debt at once is not an option for you, consider initiating a payment plan also known as an Installment Agreement IA to reduce the portion subject to wage garnishment. However, it’s important to acknowledge that while this option may sound straightforward, it’s often challenging to execute for taxpayers. If settling your tax debt were easily attainable, you wouldn’t be reading this in the first place. At Tax Service Masters Initiating Installment Agreements and similar tax resolution practices here are very common and done on a regular basis.

Prove Financial Hardship Due to Garnishment

An alternative approach to stopping a wage garnishment involves demonstrating that the garnishment is causing significant financial hardship. Initiating communication with the IRS and conveying the adverse effects of the wage garnishment on your financial well-being may lead to a suspension of the garnishment. It’s important to note that hardship is a subjective matter. To substantiate your claim, you must furnish the IRS with financial details and a compelling explanation of how the wage levy is causing financial distress. Engaging the services of a tax professional can be instrumental in navigating this process effectively. At Tax Service Masters we help taxpayers overcome this challenge.

Stop Earning or Retain Your Employment?

Easy answer, resist the urge to quit over a wage garnishment, why you might ask… by resigning from your job you might temporarily stop wage garnishment, but the IRS will find other means of garnishment. While quitting your job may cross the minds of those facing a wage garnishment, it’s not a practical solution. Ceasing to earn income will lead the IRS to explore alternative avenues, such as seizing your assets or tapping into the funds in your bank account, furthering an already bad situation.

Reach a “Currently Not Collectible” Status for Your Account

If you lack funds or assets, the IRS will refrain from initiating enforced collection measures against you. Nevertheless, the agency will periodically reassess your circumstances to determine if there have been any changes. In the event of alterations, the IRS may require you to resume payment of the outstanding tax amount. To secure a “currently not collectible” status, you must submit an application. If applicable, we frequent this tax resolution option for our customers.

When a taxpayer doesn’t take action or respond to the IRS intent to collect, the IRS will continue to move full speed ahead. Upon commencement of a wage levy, your employer will supply you with a form to complete. Any interest and penalties will continue to accrue while the levy is in place. Normally, the IRS will also seize all state and federal tax refunds, and it may also levy other assets such as real estate, personal property, and bank accounts.

To steer clear of a wage levy, it’s crucial to proactively engage with the IRS before the levy is enforced. The IRS provides various solutions to assist individuals in addressing their outstanding taxes, such as installment plans and an offer in compromise. Once a wage levy is initiated, establishing alternative arrangements becomes challenging. Seeking guidance from Tax Service Masters can be beneficial in navigating this situation.

Filing for chapter 7 or 13 bankruptcy — This will place a stay (hold) on the garnishment while the bankruptcy case is proceeding, but it will not necessarily eliminate your debt. In some cases, you can get tax debt discharged through bankruptcy, but the debt must meet specific criteria. Your obligation to pay off the debt may be discharged, but not eliminated. If you listed the IRS as a creditor in your bankruptcy, the IRS should receive electronic notice about your case from the U.S. Bankruptcy Courts within a day or two of the petition date. If you’re not sure they received notice, call the Centralized Insolvency Operation at 800-973-0424 and give them your bankruptcy case number. To read more about this topic visit: https://www.irs.gov/businesses/small-businesses-self-employed/declaring-bankruptcy

We do not currently offer this service, due to lack of demand and adverse credit effects. Our advice is to contact a local bankruptcy attorney for this specific tax resolution option.