No matter what kind of debt you have; mortgage debt, car payments, credit card debt, student loans or any other type of payment obligation, it’s never something you look forward to paying every month. And unfortunately, if you fail to pay your debt, you just may find your wages garnished.
Wage garnishments are levy actions by the federal government to collect an unpaid tax debt. When a taxpayer owes back taxes, the IRS will first place a lien on their accounts. A lien is a right to keep possession of property belonging to another person until the latter’s debt is fully paid. The IRS has the authority to enforce a wage garnishment if a taxpayer has failed to respond to the IRS with a full repayment of debt or an appeal for a payment negotiation. If the individual or business fails to take action to pay back their debt, either by paying in full or by submitting a form of tax resolution for payment negotiation, then the IRS will move forward with levy actions.
Wage garnishment laws for the IRS are different from other collectors, because they do not require a federal court ruling to begin collection actions. They have the full authority to act on behalf of the federal government. This is why it is critical that you reply to the notice from the IRS immediately. One of the most common forms of IRS levy is wage garnishment.
What is Wage Garnishment?
A wage garnishment is issued to your employer, who is then obliged to siphon a portion of your paycheck to the IRS for repayment. The IRS will typically take at least a quarter or more of your income. While they may consider your current financial situation, they are not held responsible for the bills you have to pay, and make little consideration if you are self-employed. In fact, if you have a spouse, he or she may even be affected if you have decided to file jointly. It is harder to stop wage garnishment and other levy actions after they have been issued. The IRS is only required to leave a single taxpayer who is filing as single $845 a month as a “minimum living requirement”. Any income over that amount is available for them to levy. For married individuals, the amount is $1362 per month.
If your earnings are garnished to pay your debts, that garnishment is considered received by you for federal income tax purposes. That being said, the amount garnished is income and will be reportable as wages on your federal tax income return. The bottom line is that even though this money never made it into your bank account, wage garnishment is 100% taxable. This is just another reason to stop wage garnishment from happening.
The best way to stop IRS garnishment from being issued is to respond to the notice from the IRS right away. If you fail to respond to the demand of payment for a tax liability, the IRS may garnish your wages.
The professionals at Community Tax have worked with many clients who have suffered by having their wages garnished by the IRS. In many cases, our tax resolution team is able to help these individuals stop wage garnishment and enter a tax resolution plan. A tax resolution plan allows you to pay to the capacity of your ability—it can mean a halt to a wage garnishment and a negotiation for a payment plan that will keep you financially stable. Negotiating with the IRS to halt a levy requires extensive financial documentation and firm evidence that the levy is causing undue hardship, the tax debt was assessed incorrectly, the statute of limitations will expire on the debt, or you can make an offer for another payment plan that the IRS accepts. Our team has extensive knowledge of IRS wage garnishment laws and can help you understand available options.
Why Would My Wages Be Garnished?
Wage garnishment is used to pay any number of debts, such as:
- Unpaid local, state and federal taxes
- Unpaid child support
- Unpaid student loans
- Unpaid private creditors
By law, most creditors must go to court in order to garnish your earnings, but some government obligations (i.e.: money owed to the IRS), don’t require a court order.
How to Stop Wage Garnishment
There is no way around it—the only way to solve the issue of an IRS wage garnishment is to confront it and get the tax debt resolved. Our Community Tax employs experts include a team of tax attorneys, enrolled agents, and certified public accountants who are experts at tax resolution to give our clients the help they need to move forward. Our licensed experts have already helped taxpayers across the nation get the help they need to settle a deal to solve issues associated with tax debt and back taxes. The members of our team all have a diverse range of experience and come from all across the country with a passion to help those in trouble with the IRS. Our team has saved millions of dollars for our customers in total, and we would like to continue by helping you.
In order to qualify for any payment option, it’s important to comply with all IRS stipulations. It is possible to negotiate an installment agreement. This option will give you three years to pay off all of your IRS debt. One can obtain an installment agreement even with a poor credit score. The key is to show that you have not been negligent on previous debts, indicating that you are responsible and will agree to pay the monthly payment in full—and more importantly, on time.
Many people find that the most viable option for paying off tax debt is to pay it in monthly installments. The team of professionals at Community Tax can help you by negotiating an installment agreement with the IRS. It is often an efficient and manageable way to begin paying off your debt. As mentioned earlier, it is critical that you follow through and pay off all of your debt within the given amount of time. You must also promise that you will file all future taxes on time. If you fulfill these two qualifiers, you can actually remain in good standing with the IRS once the debt has been fully paid off. Should you decide to appeal before the IRS to instate an installment agreement, it is within the authority of the IRS to determine whether you qualify and how much you will be required to pay each month. Keep in mind that while considering your case, they will analyze a multitude of factors to determine your required monthly payment. This includes your income, assets, and necessary expenses for every month.
If the IRS decides that you are in good standing despite your debt, it is possible to obtain an online payment agreement. In order to qualify, as an individual you must owe no more than $50,000 in tax debt in both income and combined penalties and interest. If you would like to make an online payment agreement, you must respond quickly to persuade the IRS to grant you this choice.
Our tax professionals have years of experience with clientele of every financial background. We will help you every step of the way, from organizing your financial and tax information, to appealing on your behalf before the IRS and negotiating a plan that works best in your favor. We have a passion to help our clients out of every financial pitfall, whether it be minor or severe. Don’t go it alone—our tax professionals and other experienced staff will aid you at every turn.
IRS Garnishment Help: An Offer in Compromise Agreement
Should one of our tax attorneys determine that, perhaps, you cannot possibly afford to pay off your total debt to the IRS within a reasonable amount of time, he or she will go to great lengths to create an offer in compromise. An offer in compromise is granted by the IRS in the case that you can’t afford to pay the full amount, without suffering severe financial difficulties. While it is one of the most difficult agreements to obtain from the IRS, if they determine that this is the best course of action, they will be willing to settle for a lesser amount. In order to qualify for an offer in compromise, the IRS demands that you provide, in great detail, all aspects of your financial situation.
What is an OIC?
Not sure if you can afford to take care of your total tax debt, even if you did make monthly payments? You may qualify for an offer in compromise. An offer in compromise is a statement of permission allowed by the IRS to pay off less debt than you owe. If the IRS recognizes that it is simply unrealistic for you to pay off the full amount, then they might agree to an offer in compromise. There can be any number of legitimate reasons why a taxpayer may be given an offer in compromise by the IRS. Most people who qualify in this category are currently in a financial situation where they cannot afford the payment, indicating a severe financial hardship. The IRS is willing to take into consideration many financial factors, including your income, asset equity, ability to pay, and your required expenses in order to live.
The IRS will usually grant an offer in compromise when they surmise that the total amount of tax debt cannot be collected within a realistic time frame. It is critical that a professional sit with you and carefully comb through all possible payment options before submitting the paperwork for an offer in compromise. Our qualified tax experts at Community Tax have the finesse to go through every detail and we will help you determine if this is the best option for you.
With the wide variety of payment options available, it can be difficult to ascertain which route is best suited to your situation. You can reduce your financial burden by thousands of dollars or manage your payments in a way that doesn’t warrant the severe stress and depression that can follow financial hardship. All agreements require that you file all taxes, past and present, and the promise to pay what you owe in the time you agree every month. Remember that different compromises entail different requirements that may have strings attached, such as whether creditors will be notified.
Hiring a Tax Professional to Stop Wage Garnishment
Those who have never worked with a tax professional before may wonder if they should hire one now. After all, is it worth the investment? However, it is important you stay in tune with your financial situation. You can prevent severe penalties on behalf of the IRS by reaching out before a notice even arises. It is likely that you are already aware of your ability to pay off tax debt before the IRS contacts you. Contact us now to prevent accruing penalties and interest that can worsen your situation.
However, if you already find yourself stuck with a notice by the IRS, there is no need to panic. You may not yet be equipped with the financial tools to move forward, but our tax professionals are more than qualified. Note that when you receive any notice from the IRS, it is in your best interest to respond immediately. The IRS makes a great effort to warn you well ahead of the lengths they will take to receive your tax payment in full as soon as possible. However, if you respond appropriately, they are likely to work with you. After all, they want as much of their owed money as they can get; in most cases, they do not want to resort to the final blow of a levy and garnishment on your wages and assets. However, make no mistake: they will take action if you refuse to respond with an application to negotiate.
You do not need to go it alone. Our team of tax professionals, including tax attorneys, enrolled agents, and CPAs are well equipped to prepare you for the road ahead. In addition, our experts are granted unlimited rights by the IRS to represent you before the IRS. It cannot get any easier than that—never fear that you are inexperienced and inadequate to the IRS, because we can give you the confidence by representing you.
Our tax professionals are here to solve your tax issues. Call us today for more information about how to stop IRS garnishment, levy actions and get out of tax debt.