Running up back tax debt can lead to a host of problems with the authorities. Your assets, like cars and boats, can get seized by government agents and sold to the highest bidder.
But your future economic livelihood can also be seized by the IRS through the form of a wage garnishment.
A wage garnishment is essentially a levy on wages. If you have enough IRS back tax debt, the government can seize your money before it makes its way to your wallet. It’s like working for a drastically reduced salary – with part of your wages going to the feds instead of to your bank account.
Because the IRS is more and more focused on collection enforcement, they’re less concerned with when they collect the back tax debt as opposed to how they collect it. Removing the wage garnishment with the goal of setting up an IRS payment plan is where hiring a tax attorney can make the biggest impact.
The power of the IRS to issue a wage garnishment to those with back tax debt is strong, but IRS agents do have to follow procedures aimed at giving notice and constitutional due process.
For instance, a back tax debtor will typically receive a written letter from the IRS. It’s called a Notice and Demand for Payment. This will give you notice that you owe back tax debt to the IRS and that the IRS is eying your assets to satisfy the debt.
The taxpayer will then have to ignore the notice and not make any back tax payments. Sometimes, the debtor will refuse to make any payments.
Finally, the IRS will send a Final Notice of Intent to Levy and Notice of Your Right to a Hearing. This correspondence gives the back tax debtor a month to be informed of the impending wage garnishment. The IRS doesn’t send this without doing a little due diligence. If sent by mail, it’ll be sent via certified or registered mail. It could also be provided via personal service, or left at one’s home or business.
But an IRS wage garnishment can be removed. The IRS releases wage garnishments if they cause financial hardships, but it must be informed of that. A release won’t satisfy the tax debt, but it gives a taxpayer the opportunity to set up an IRS payment plan.
To remove a wage garnishment, make sure to file all back tax returns with the IRS. An IRS Form 433 will have to be filed, which gives the IRS detailed financial information that it uses to determine what kind of tax resolution plan is eligible. Form 433’s require a host of documentation, so get ready to do some document digging.
If the IRS determines that the a back tax debtor is eligible for a payment plan, the taxpayer can then ask for release of the garnishment.
While removing a wage garnishment is best done with the help of a tax attorney, the best way to avoid an IRS wage garnishment is by working with a tax professional to get your tax situation on more sound footing.
Running a business’s or household’s expenses can get messy, fast. But tax professionals know how to prevent that from happening, which is why their services are key to wage garnishment prevention.
Have you ever had your wages garnished? How did you handle the situation? Comment below or tweet us at @StopIRSDebt!
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