IRS Wage Garnishments Explained
Tax Lady Roni Deutch explains IRS wage
garnishments and how taxpayers can get them released.
What is an IRS Wage Garnishment?
Technically speaking, an IRS wage
garnishment is a written notice the IRS sends to a taxpayer's employer
that require the employer to withhold a significant amount from the
taxpayer's paycheck and forward it directly to the IRS. The employer is
legally obligated to follow the IRS' instructions, and can get hit with
serious penalties if they do not.
Garnishments for Self-Employed Taxpayers
Do not make the mistake of thinking that
just because you are self-employed that you will not have to worry about a
wage garnishment. The IRS can levy your accounts receivable or unpaid
contracts to collect your unpaid tax liabilities. Additionally, it is
important to remember that a wage garnishment is only one of the IRS's
collection activities. If they cannot garnish your income, then they will
likely go after your bank account or personal property.
Notification of a Garnishment
When a taxpayer neglects to pay their full
tax liability, the IRS will take certain steps to collect what they are
owed. First of all, the IRS will send you a letter notifying you of past
due taxes. They will usually demand that you pay within 30 days before
taking collection activity. The IRS will then send you a final notice of
their intent to levy. If you still do not respond after another 30 days,
then the IRS can begin issuing wage garnishments and bank levies to
collect your tax debts.
Garnishment Amount
The amount of money the IRS will require an
employer to withhold will vary widely depending on the taxpayer's unique
financial situation. Typically, the amount required to be withheld will be
between 30 percent and 70 percent of the taxpayer's gross earnings. When
calculating how much to garnish, the IRS will look at a number of factors,
including the taxpayer's earnings, the frequency of when those earnings
are received, the taxpayer's total tax debt, the taxpayer's total number
of dependents, etc.
Releasing a Wage Garnishment
After the IRS issues a wage garnishment, it
can be very difficult to get it released. Before the IRS will release the
garnishment, you will need to resolve your tax debt. This can be
accomplished by paying the IRS in full or negotiating a settlement such as
an Offer in Compromise or an Installment Agreement. After the debt has
been resolved and all tax returns have been filed, you can request that
the IRS release the garnishment.
Your IRS Collection Rights
You have some rights when it comes to IRS
wage garnishments. Your employer cannot legally terminate your employment
because of a garnishment. If they do, then they will be subject to fines,
and possibly criminal charges. You also have the right to negotiate with
the IRS, either by yourself or by taking advantage of the Taxpayer
Advocate Service. Finally, the IRS has a page on their website dedicated
to taxpayer rights. You can check it out at IRS.gov.
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