Can the IRS Garnish Your Wages If You’re Self-Employed?

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Independent contractors and self-employed taxpayers may not have to worry about wage garnishments, but that doesn’t mean they entirely free from IRS collection actions. The IRS has many other collection powers at its disposal, so you’re better off resolving your tax problems through negotiation or a settlement.

How Wage Garnishments Work

Employers handle the following tax matters for their employees:

  • They withhold income taxes based on your W-4 allowances and send this money to the IRS.
  • They withhold payroll taxes (Social Security and Medicare) and send it to the IRS.
  • They pay their own portion of your payroll taxes.

It’s fairly simple for the IRS to ask your employer to send a larger portion of your pay directly to the IRS. This is how an IRS wage garnishment works, and your employer is obligated to obey the order.

Things aren’t so simple for self-employed taxpayers. You pay both halves of your payroll taxes (known as self-employment taxes) and you withhold your own taxes by making quarterly estimated tax payments.

You may have a few major clients or a few hundred smaller clients. Therefore, it’s impractical for the IRS to attempt to garnish your wages.

Enforced Collection Actions

  • They’ll ask you nicely to pay your tax debt and give you a deadline to pay up or negotiate an installment agreement.
  • A Notice of Federal Tax Lien (NFTL) will be filed against your home, which will make selling it or refinancing very difficult.
  • All of your tax refund checks (federal and state) will be seized and applied to your tax debt.
  • The funds in your bank account may be seized up to the amount of your unpaid balance.
  • Your passport can be revoked and other assets may also be seized.

During the process, penalties and interest will continue to accrue on your back taxes, increasing the amount you owe. If you want to avoid having your bank account drained or a lien placed on your home, contact a tax debt attorney to discuss your options.

Contact an Attorney

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Venar Ayar, Esq.

Venar Ayar, Esq.

Attorney-at-Law, Master of Laws in Taxation
Principal and founder, Ayar Law

Venar is an award-winning tax attorney ranked as a Top Lawyer in the field of Tax Law. Mr. Ayar has a Master of Laws in Taxation – the highest degree available in tax, held by only a small number of the country’s attorneys.