Stopping Wage Garnishments

Wage garnishments by the Internal Revenue Service (IRS), also known as IRS wage levies, are one of the most aggressive and effective collection techniques that are commonly used by the IRS in order to collect taxes from delinquent taxpayers.  Unfortunately, becoming subject to a wage garnishment by the IRS is unlikely to be a pleasant experience, and will result in a substantial decrease in your net pay after your garnishment payments are deducted. If you are seeking to stop wage garnishments from occurring it is important to have an experienced and knowledge attorney to advise you on your legal options.

Garnishment of Wages for Unpaid Taxes

Essentially, the U.S. tax code permits the IRS to seize any of your assets, including your real and personal property, in order to pay your tax debts.  While real property is limited to real estate, personal property includes bank accounts and paychecks.  Therefore, a wage garnishment is considered to be a seizure of your personal property under the tax code.

The IRS is not permitted to seize your entire paycheck in order to pay your tax debt.  Rather, the IRS garnishes a certain percentage of your paycheck, based on a formula.  You will be left with the standard deduction amount and a personal exemption amount, which is determined by your filing status and the number of dependents that you are eligible to claim for tax purposes.  In this manner, the IRS will determine the amount of income that you will have left following the garnishment, even if you determine that said amount is insufficient for your needs. 

Wage Garnishments Process

Before garnishing your wages, the IRS must send you a letter entitled “Notice of Intent to Levy”.  If you do not request a hearing in response to the Notice of Intent, the IRS is then free to seize any of your personal property, including your paycheck.  When the IRS takes action to garnish your wages for back taxes, it sends a document called an Order to Withhold Notice directly to your employer.  This order directs your employer to withhold a certain percentage of each of your paychecks until your tax debt is paid in full, which can include not only your wages or salary, but also any bonuses and/or commissions that you earn.  The wage garnishment will not cease until the IRS has released it.

Stop Wage Garnishments

As a taxpayer, you do have the right to file an appeal if the IRS issues a wage garnishment or wage levy, which normally causes the IRS to suspend collection efforts during the appeals period.  If you are successful in your appeal, the IRS will release the levy from your wages.

There are a number of defenses that may be available in challenging the IRS wage garnishment.  For instance, if your offer in compromise is still pending before the IRS, if you have proposed an installment agreement in order to pay off your debt, if you are in the midst of bankruptcy proceedings, or if collection of your tax debt is barred by the statute of limitation.  Whichever route you take in fighting an IRS wage garnishment, you would be wise to engage the services of an experienced tax attorney to assist you.