What is a wage garnishment?
A wage garnishment, also known as a wage levy, is a tool the IRS uses to seize a portion of your wages to satisfy a delinquent tax debt. The IRS will send you a Letter of Intent to levy and a Notice of Right to a collection-due process hearing. The hearing provides you an opportunity to prevent the IRS from garnishing your wages. The IRS can begin wage garnishment 30 days after sending you the Letter of Intent to Levy and the Notice of Right to a collection-due process. There are some forms of income that are protected from garnishments: unemployment benefits, certain types of annuities and pension payments, workers compensation, child support, certain military disability payments, and certain public assistance programs. Most other types of income, wages, payments you receive will be garnishable.
If your wages are garnished, then the garnishment will stay enforced until the total sum of the levy has been collected by the IRS or the collection period has expired or the IRS releases the garnishment. In most cases part of your wages are exempt/ protected from the garnishment. This amount essentially is the minimum amount of money you need for your extreme basics –food, shelter, etc., as determined by the IRS. If you receive self-employment / independent contractor pay, also known as 1099 income, then you might not have any of your income protected from a garnishment.
How to protect yourself from a wage garnishment
Typically the IRS will not begin the levy/garnishment process until you have had several chances to contact them and to arrange a resolution. The best way to protect yourself is by prevention. Keeping in contact with the IRS and working towards a tax resolution will keep you in good standing, and, in many cases, will make it so that the IRS will not want to garnish your wages. The IRS uses wage garnishments as a collection tool for those delinquent tax payers who are ignoring the IRS’ requests for payment. Imposing a garnishment is an effective tactic the IRS uses to have the delinquent taxpayer get in touch with them. It’s definitely an eye opener.
What to do if the IRS has issued a wage garnishment
If you are too late and prevention is not an option, you will need to attempt to have the wage garnishment released. The IRS is required to release a wage garnishment if: a garnishment creates an economic hardship; if you file for bankruptcy, if your tax debt has been satisfied, if the collection period has expired, or if the IRS determines a release will then facilitate the collection of the delinquent tax debt.If you request the IRS to release a wage garnishment due to an economic hardship, you will have to prove to them that you are currently suffering from this hardship. The IRS has specific forms that you will be required to complete and submit so that your current financial situation can be reviewed. An economic hardship is not having a hard time saving for the family vacation. A hardship in the eyes of the IRS means you might not be able to pay for housing, food, and other basic essentials of life.
If you would like to learn more about how we can help you resolve your delinquent tax debt and how we can assist you in preventing or releasing a wage garnishment, then please read our article, How We Help You, Help Yourself. This is an article that discusses a tax debt settlement program that allows you to resolve your delinquent tax debt for the least dollar amount possible and at the same time allows you to not have to pay thousands of dollars to a CPA, tax attorney or other so-called industry experts. You may also visit us at www.TheTaxSettlementGroup.com or call us at 877-801-9166.
