Tax Debt 101: What Happens During an IRS Wage Garnishment?

If you found your way here, we just wanted to take a moment and say something you may need to hear:

It’s going to be okay.

Frankly, wage garnishment is one of the scariest possible outcomes for many taxpayers struggling with tax debt. It’s as worrisome as filing for bankruptcy and as about as confusing to the average taxpayer as a tax lien.

You’re right to be taking your wage garnishment seriously; it’s no joking matter. But that doesn’t mean you need to let a potential wage garnishment overwhelm your thoughts and day-to-day life more than it needs to.

In fact, we think it’s time to take control.

Welcome to IRS Wage Garnishments 101.

At StopIRSDebt.com, we believe the best tool you can have at your disposal for tackling your tax debt and taking on the IRS—is knowledge.

Like many things associated with taxes, wage garnishment can be a bit hard to understand when you haven’t dealt with it before. And that means very few taxpayers have a good understanding of it.

You’re looking for wage garnishment help, and we’ve got it. In our two-part series, IRS Wage Garnishments 101, we’re going to walk you through IRS wage garnishment from start to finish.

Below, we’ll introduce you to wage garnishments, explain how the IRS decides to garnish wages, explore what happens when the IRS decides to garnish your wages, and discuss a few ways wage garnishment can affect you.

What Is Wage Garnishment?

Let’s start with a basic definition and go from there.

Wage Garnishment – A legal procedure in which a person’s earnings are required by court order to be withheld by an employer for the payment of a debt.

In short, a wage garnishment—of any kind—occurs when you have a debt. In some cases, a creditor may opt to pursue this option when you failed to arrange a payment plan or have failed to make payments to square your debt away.

In practice, a wage garnishment is pretty straightforward. If a court grants a wage levy, your employer will begin withholding a portion of your paycheck; that money is redirected to pay the debt.

The IRS isn’t the only group that uses wage garnishment; many traditional lenders also use the method.

How Does the IRS Decide to Garnish Wages?

When you have an outstanding tax debt, the IRS has a number of avenues it can take to get its hands on your money—and they’re all pretty intimidating when you’re on the other end of them. But how does the IRS determine the need to garnish your wages?

The IRS will never garnish your wages if you don’t have a tax debt. But if you have accrued a tax debt (through tax evasion, underpayment, or something else entirely), the IRS will assess your tax debt and send you a notice.

Note: The IRS will never email you or call you about a tax debt. If you receive a contact claiming to be the IRS, it’s likely a scam.

The correspondence you receive from the IRS will typically include a notice and a “Demand for Payment,” along with the total you owe. If you fail to pay that total or attempt to negotiate a repayment plan, the next piece of mail from the IRS you receive will be a Final Notice of Intent to Levy along with a Notice of Your Right to a Hearing.

While you should take every correspondence from the IRS seriously, those last two notices are red flags, because they mean an IRS wage garnishment is right around the corner. If you don’t reach out to the IRS and attempt to get on the right track, the IRS will begin garnishing your wages.

What Happens When the IRS Garnishes My Wages?

If your IRS tax debt reaches the point of wage garnishment, your paychecks will become a lot thinner and your life will become a lot harder.

This is why wage garnishments are such a doomsday scenario for people saddled with tax debt and are right up there alongside having your property seized by the IRS.

3 Ways Wage Garnishment Can Affect You

Let’s dive into a few specific ways wage garnishment can—and likely will—affect you.

1. Financial Strain

The IRS has even more leeway when it comes to levying your wages than most creditors. For example, in 2018, a single parent with two children earning $1000 weekly may end up seeing only $425.96 of that paycheck. And if you were to make $3000 weekly, you might end up with $425.96. In either case, that’s over 50 percent of your weekly wages!

There are ways to reach out to the IRS if your wage garnishment is placing a hardship on your family, but the reality of wage garnishment is a dire one. Depending on your tax debt, a wage garnishment will radically change your income and place a huge financial burden on you—potentially for a long, long time.

2. Embarrassment

When the IRS levies your wages, your tax debt is no longer just between you and the IRS. The Department of Labor protects employees for being terminated by their employers just because their wages have been garnished—but it doesn’t protect employees from termination if their earnings are garnished for a second or future debt.

Your wage garnishment isn’t likely to find its way to the office water cooler, your employer’s involvement in your tax debt can still be humiliating.

3. Stress

When you’re dealing with a wage garnishment, the anxiety associated with your tax debt reaches an entirely new level. Depending on the amount you owe, your wage garnishment may extend for weeks, months, or even years.

It’s common to feel overwhelmed or that there’s no light at the end of the tunnel. Not only will you feel anxious when looking at your paycheck, but you’ll also feel it when paying bills, buying groceries, and picking up prescriptions. Many of our clients describe wage garnishment as rock bottom.

How Do I Stop an IRS Wage Garnishment?

You don’t need to hit rock bottom to start climbing back out from under your tax debt. In fact, there are a number of ways to stop your IRS wage garnishment in its tracks—even before it hits your first paycheck.

Wage garnishments are every bit as intimidating as tax liens and have the potential to severely impact every aspect of your life—from your trips to the grocery store, to your vacation potential, your savings, and more. Wage garnishments are serious business, but we don’t think they should ruin your life.

So, how can you stop an IRS wage garnishment?

We’ll walk you through unreliable tactics for getting rid of a wage garnishment before going over four ways to avoid or stop your wage garnishment with the IRS.

How Not to Get Rid of an IRS Wage Garnishment

Despite their ineffectiveness, a number of dubious methods for “resolving” wage garnishments still persist. We need to clear them up.

1. Changing Your Employer

If your employer is the one sending a portion of your pay to the IRS, then couldn’t you just find a new employer? It’s not that simple.

Many who find their wages being levied—by anyone, not just the IRS—think that they can dodge the garnishment by switching jobs. But this will only delay your garnishment, not avoid it. For most wage garnishments, you’re legally required to inform the court of your job change. On top of that, you’ll file new tax paperwork when you start your new job, and the IRS will be quick to follow the trail.

2. Quitting Your Job Entirely

Some folks attempt to hide from a wage garnishment entirely. If you’re not making any money, then the IRS can’t get their hands on it, right?

Think seriously before quitting your job to avoid a wage garnishment. Burying your head in the sand won’t change the reality above ground; you’ll still owe the IRS money. Except by quitting your job, you’ll not only have lost a primary income source, but you may also have forced the IRS to take other drastic actions to settle your debt.

How to Get Rid of an IRS Wage Garnishment

There are a handful of proven methods for getting out from under your IRS wage garnishment—once and for all. Let’s cover the top four.

1. Pay Your Debts

The surest way to stop your wage garnishment—or avoid the process entirely—is to pay your taxes and handle your tax debts in a timely manner. That means staying current on your tax return filing and paying your tax debts before they balloon into something unmanageable.

However, we understand that sometimes tax debt can get out of hand before you realize it. If that’s the case, your best way to avoid the IRS levying your wages is to be responsive with all IRS communications and take earnest steps to pay your debts.

Pro Tip: A professional tax mediation company can help you review your previous returns and finances—which may lower your tax bill.

2. Establish an Installment Agreement

For some smaller tax debts, it may be perfectly within your budget to cover the balance and move on with your life. However, tax debts of thousands, tens of thousands, or more may simply not be doable in one lump sum.

When you respond to communications and notices from the IRS, you may be in a position to work out an installment agreement—which means you make regular payments over time until your debt is paid.

At first, this may not seem all that different than having your wages garnished. But think about it. Considering you’ll be in repayment one way or another, wouldn’t you prefer to receive your full paycheck and direct some of that toward another bill—rather than having the IRS decide how much of your paycheck you’ll get in the first place?

Pro Tip: Enlist a tax relief company to help you lock down an installment agreement that works for all parties involved.

3. Prove Your Financial Hardship

As we’ve discussed, a wage garnishment can put you and your family in a serious financial bind or at least significantly change your standard of living. However, for some taxpayers, a wage garnishment can push you over a financial cliff to the point you simply cannot make ends meet.

In these cases, you may be able to qualify for financial hardship. After you get current with all your past due tax returns and gather your financial information to verify your income, expenses, and assets, the IRS will review your information. If you qualify, the IRS will put your account in currently not collectible (CNC) status.

While this can be a big relief, financial hardship isn’t a permanent stoppage on your wage garnishment—it just means the IRS won’t be actively collecting your tax debt for a period of time. You will still owe the IRS money, you will still accrue interest on that debt, and you may still have a federal tax lien on your credit report.

Pro Tip: Give yourself a chance of eliminating—not postponing—your tax debt by finding other solutions by reaching out to a tax firm.

Stop IRS Wage Garnishment in Its Tracks

The best way to stop an IRS wage garnishment isn’t by ignoring it, avoiding it, or postponing it. The best way to stop an IRS wage garnishment before it even starts is to stand there and face it.

And the smartest way to face it is with a team at your side.

Now that you have the knowledge about IRS wage garnishments that you need, it’s time to fight back and beat your tax debt once and for all. Your debt isn’t going to disappear overnight, but getting in touch with a smart, professional tax mediation and tax relief company like StopIRSDebt.com can offer you the support and expertise you need.

We’re always here for you. Remember that.

Ready to stop your IRS wage garnishment? Then get in touch for a chance at financial freedom from the IRS.

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