Those individuals who are unlucky enough to find themselves in the situation of owing back taxes will soon learn about the many powerful collection tools that the IRS has at their disposal. While having any major collection account is scary, owing back taxes is terrifying.
If you are in this situation, you should know that the IRS will use three powerful tools with which to collect the money that you owe them. Chances are, they will get a levy against your bank account and seize all of the funds you have. They may also pursue a property levy. In some situations, they may try to force you to sell your home provided there is sufficient equity. The last tactic the IRS will use against you is an IRS wage garnishment.
What is an IRS Garnishment?
An IRS wage garnishment is something that the IRS will pursue if you are employed. Commissions and wages may be garnished, but generally speaking tips are not. A garnishment will come after a tax lien is already in place.
When your wages have been garnished, it means that the IRS will go directly to your employer and inform them that from that point forward, a certain portion of your income will come directly to them. The amount is based on a formula and IRS garnishments can be anywhere between 30% and 80% of your total income.
The IRS does not care that the garnishment leaves you unable to meet your other obligations. They don’t even care if you can’t keep the utilities on or that you are struggling to buy groceries. Their only goal is to collect the funds that you owe them as quickly as they possibly can.
How Does the Process Work?
If there is any good news it is that IRS wage garnishments are not going to hit you by surprise. You will be given a first notice which will consist of a demand to pay and a notice of their intent to pursue a wage garnishment. This notice will give you somewhere between 10 and 30 days in which to pay up.
Now is the time to take action! It is not to late to stop the wage garnishment. Ideally, you can hire an attorney to negotiate with the IRS on your behalf. If you are going to speak with them directly it is critical that you remember that no matter how polite they may be, there are not your friends! They will try to get as much information as they can from you and this information WILL be used against you.
Ideally, you can negotiate a payment arrangement before the IRS garnishment ever happens. If you are not able to do this successfully, you will be given a final notice that will inform you of your right to a hearing. From this there will be at least 30 days before a garnishment can take effect. Filing for bankruptcy will not help as recent tax liens are not discharged in a bankruptcy.
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