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What to do when you get a Notice of Wage Garnishment from the IRS

Taxpayers dread notices from the IRS. Any correspondence from the taxman is unlikely to bring good news since it could alert you about unpaid taxes and punitive penalties. Notices of wage garnishments are especially dreadful because they do not just involve the taxpayer but also their employers. In addition to compounding what might already be a stressful financial situation, wage garnishment notices are embarrassing and could strain the relationship between the employee and the employer.

Should you receive such a notice from the IRS, what are the consequences, and what should you do?

What Is Wage Garnishment?

Wage garnishment is the process through which the IRS collects back taxes directly from your earnings. Unlike other means of collecting monies from taxpayers, wage garnishment usually involves the employers as they are the ones who are required to collect money on behalf of the IRS.

To effect a wage garnishment, the IRS will get in touch with an employer and instruct them to deduct a specified portion of the employee’s earnings and remit the same to the tax authorities for payment of owing tax debt. Failure to deduct and remit the money requested could mean that the IRS will pass the liability to the employer, and, as a result, employers are always willing to comply.

How Does It Work?

Using information from Forms W-2 and 1099, the IRS has complete details about where a person is employed, their income, and tax liabilities. This information guides the IRS on the actions to take when issuing a wage garnishment.

Before garnishing wages, the IRS will notify the affected party about their owing tax dues through several notices. The notices from the IRS will not only advise you about what you owe in taxes but also allow you to devise ways to pay the debt. The IRS usually sends five notices, and, should you fail to respond, they will send a final notice (which is known as the Final Notice of Intent to Levy), after which they will write to your employer requesting a wage garnishment.

While the notices about the taxes you need to pay are sent to you, the levy notice ordering a wage garnishment is sent to your employer. You will only know about the actions the IRS intends to take from your employer.

What to Do If You Are Notified Of an IRS Wage Garnishment

The proportion of your wages deducted to pay your tax debt might adversely affect your standard of living. Depending on your current needs, the garnishment might mean you can no longer support your spouse and kids or meet your mortgage requirements. Fortunately, wage garnishment is contestable, and you could take several actions to obtain release.

First, if you were unaware of your tax dues (you probably never received the notices) and you’re capable of paying, the logical thing is to pay. Secondly, if you are like most people and you are unable to pay the full amount owed, consider taking the following steps:

• Complete Your Tax Returns

If you have yet to file your tax returns, the IRS will be unwilling to discuss any wage garnishment settlements, and the first thing you need to do is to ensure that your returns are up to date. By completing your returns, you might be pleasantly surprised to learn that you could qualify for a refund.

• Enter Into a Collection Agreement

While the IRS might demand that you pay a lump sum, you could enter into a collection agreement that enables you to pay the amount owing in installments. The IRS could accept monthly payments if you can prove that the lump sum payment will disrupt your budget and make you unable to pay for the expenses for which the funds were budgeted.

• Seek Court Protection

There are sound grounds for challenging wage garnishments in court. First, your income could already have been garnished to pay another creditor. Should that be the case, you might have been garnished for the maximum amount possible, and you are, therefore, unable to commit any more money to pay creditors.

You could also file for bankruptcy if you have not already done so. Bankruptcy protection will not only stop the garnishment but could also force your employer to release money withheld.

Even in situations where you might fail to have a complete waiver of the garnished wages, you might qualify to pay a lower amount by proving to the court that a certain proportion of your wages is exempt from levy.

The Benefits of Working with a Tax Attorney to Resolve an IRS Wage Garnishment

Do you know the proportion of your income subject to tax and the exempt proportion? Does your current financial situation enable you to meet your tax obligations? What arguments can you make to get the garnishment released?

These are the questions that a competent IRS wage garnishment attorney will help you answer. If you’re unable to pay, your attorney could seek various solutions, including offers in compromise or filing for currently not collectible status. Should you seek court protection, your IRS wage garnishment attorney will know the arguments to bring to court to ensure you obtain a favorable outcome.

How to Find the Best Tax Attorney for Your Needs

Tax law is complex and ever-evolving. The attorney representing you must be conversant with all current tax laws. If you have a lawyer with a proven track record of successfully representing people in similar circumstances, you need a lawyer who can act quickly and be readily available to answer your queries.

If you’re resident in metro Georgia metro and the areas near Atlanta, the Cumberland Law Group, LLC is dedicated to offering all the tax assistance you need. Call us now to schedule a free consultation.