If you owe back taxes and don’t respond to written payment requests from the IRS, then a percentage of your paycheck will automatically be deducted each pay period until your balance is paid.
This practice is known as wage garnishment, and it can be both financially devastating and embarrassing.
Though it may seem hopeless, there are several ways to stop wage garnishment. We’ll discuss seven viable options.
The fastest way to stop wage garnishment is to pay the money that’s owed. This is almost always easier said than done, and we don’t recommend going into further debt to get the funds.
If this is the first time you’ve been in this situation, you might be able to stop wage garnishment with a mere promise to pay, though you’ll be held to a strict deadline.
Instead of a non-negotiable wage garnishment, you could potentially pay off your debt in installments. There are fees and interest associated with this option, but you’ll be able to arrange payments in more comfortable increments.
Referred to as Offer in Compromise (OIC), this gives you the option to come to an agreement with the IRS to pay less than what you owe. This route requires detailed financial records, tax returns, and a compelling argument, but it’s not impossible, and Levy & Associates has helped many of our clients accomplish this goal.
If you’re genuinely unable to tolerate the wage garnishment, you can potentially declare hardship. The IRS is known for cutting to the bone with wage garnishments, leaving the victim without enough money to cover even essential expenses.
Depending on your situation, collection activity can stop completely, giving you time to regroup.
If your tax debt is limited to federal or state income taxes, you can wipe your slate clean by filing for bankruptcy. Though this choice sounds like a fresh start, keep in mind that it will severely impact your credit score and make financing homes, cars, and even applying for credit cards extra difficult, if not impossible. We recommend looking at other, less damaging options first.
Though we don’t recommend this option, it is worth noting because a lot of people try this.
The gist is that you run from the IRS by quitting your job and finding a new one. It can take a while for the IRS to “catch up” with you and begin garnishing wages from your new employer paycheck. Outrunning the IRS is generally not possible, and quitting your job to avoid wage garnishment is a temporary fix, at best. Ultimately, it can do more harm than good to your financial position and career development.
The longer you wait, the more penalties, fees, and interest the IRS will attach to your debt. If your wages are currently being garnished, or you’ve received a notice from the IRS that you are subject to wage garnishment, a tax expert can help.
At Levy & Associates, we negotiate with the IRS to release wage garnishment and can even reduce your tax burden. Contact us today to schedule an appointment.
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.