An IRS wage garnishment happens when you fail to pay the IRS and they come after your wages. When your wages are garnished, the IRS will take money straight from your paycheck, and it can be either a small portion of your pay or almost the entire thing.
This sounds extreme—and it is. In fact, this is the final step the IRS will take to get your unpaid taxes before taking you to trial and putting you in jail. The good news is that you will always see this coming, as the IRS will send many letters, for many months, before actually taking action, and there are things you can do to stop it.
If you failed to respond to the initial notices from the IRS, you will get a final notice in the mail. This notice will inform you that you have 30 days before the wage garnishments begin. Once this is received, this is your last change to make a change and work with the IRS. More often than not, the IRS will want to work with you, as wage garnishment not only looks bad on them, but it can be very expensive for them to complete.
If you are unable to pay all of your debts, try to pay off as much as you can. Even if the money you offer is much less than they need, it is still a step towards paying off your debt and could delay or stop the wage garnishment process. You may also want to work with a tax attorney to file for an offer in compromise, which is where you get the IRS to accept less than what you owe.
If this doesn’t work, consider making payments. This is called an installment agreement and if this is granted, you will be able to pay off your debts in three years on a monthly installment base.
If you don’t have any funds to pay the IRS either on a monthly or minimal pay-off basis, you still have a few options. While not ideal, you can either plead poverty or file for bankruptcy. The first one is less dramatic, as it is usually just a tactic to delay the garnishment from happening. You must prove to the IRS that you are experiencing a financial hardship and that if the wage garnishment happens, you won’t be able to afford your basic daily living expenses. If this doesn’t work, your last option is to file for bankruptcy. Bankruptcy can be a dark and challenging road, so it isn’t suggested unless you are truly in a dire financial situation. Filing for bankruptcy will immediately stop the wage garnishment.
If you have received your 30-day notice, or feel you may be at risk for wage garnishment, contact the experienced tax professionals at Levy, Tax & Associates. Contact us at 1-800-TAX-LEVY or visit our website to learn more.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.