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When Will the IRS Garnish Wages?

By on Jun 12, 2013 in IRS | 0 comments

The idea that the IRS could garnish your wages is frightening and definitely something that you want to avoid.  If you have not paid back taxes, have been contacted by the IRS for payment, or you think that a wage garnish is a real possibility for you, it is important to understand the key terms as well as the process the IRS follows:

Levy:  a legal seizure of your property to satisfy a tax debt.  The IRS can levy:

  • Actual property that you hold (house, boat or car).
  • Property that is yours but is held by someone else (wages, retirement accounts, dividends, bank accounts, licenses, rental income, cash value of your life insurance, etc).

Lien:  a claim used as security for the tax debt.

Generally, the IRS will not levy your property or garnish your wages until the following three formal requirements have been met:

  • IRS assessed the tax and sent you a Notice and Demand for Payment;
  • You neglected or refused to pay the tax; and
  • You have received from the IRS a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy. The IRS may give you this notice in person, leave it at your home or your usual place of business, or send it to your last known address by certified or registered mail, with return receipt requested.

One of the most frequently asked questions about the long term effects of a levy are how employers can respond to this action.  You should be aware that employers are prohibited from terminating you from your position because of a wage garnishment issue.  This is a protection extended to you under the recent Consumer Credit Protection Act.  However, you should note that this courtesy is only extended to you once.  A second garnishment is not protected by the Consumer Credit Protection Act and an employer has the right to fire an employee who receives a second garnishment.

Most often, a wage levy is continuous and stays in effect on future wages until the debt is paid or the levy released.  Since wages/salary includes bonuses, commissions, and other fees, it can have devastating consequences.

Short of fully paying the liability, a taxpayer can avoid enforcement by filing for bankruptcy protection, entering into an Installment Agreement or an Offer in Compromise with the IRS, or by convincing the IRS to place the tax liability into “Currently Not Collectible” status.

If you are faced with a levy or you receive notice of a wage garnish, it is critical to act quickly, carefully and aggressively.  Success Tax Relief has extensive experience managing this very difficult process for our clients and can help put a plan in place so a levy is avoided.  Call Success Tax Relief at 1-888-825-1179.  Our strong team of experienced tax professionals is ready and willing to help you.  We will work directly with the IRS so that you do not have to.  We have helped thousands put Installment Agreements and Offers in Compromise into place to prevent wage garnishment, liens, and levies.

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