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How to Fight a Wage Levy

What Is an IRS Wage Levy?

When the IRS garnishes your wages, it can mean serious financial difficulties. But what is a wage levy and what can you do when you receive one? Here is our helpful guide on how to fight an IRS wage levy.

A wage levy, also known as a wage garnishment is one of the most powerful collection tactics used by the Internal Revenue Service, as it takes your money before you ever have a chance to receive it. Under levies, an individual’s wages are transferred directly from an employer to the IRS to satisfy a delinquent tax debt.

Before garnishment can begin, an individual should receive several notices from the IRS before the wage levy can take effect. The final notice should be a “Notice of Intent to Levy.” Once this notice is received, an individual needs to take immediate action to prevent a wage levy from taking place.

How Much Will the IRS Take in a Levy?

The IRS has set rules which limit how much they can take from each paycheck. Publication 1494 lays out how much income is exempt from the wage levy based on the filing status of the individual and the number of exemptions they have.

If you are single with no dependents, for example, and are paid on a monthly basis, you get to keep $887.50 per month of your wages. That probably won’t even cover rent or mortgage payment for many people. The rest of your wages go to the IRS. If you get a performance or year-end bonus, the entire amount will go towards your tax debt.

How to Avoid a Wage Levy Beforehand

Once an individual receives a levy notice from the IRS, they have only 30 days to request a Collection Due Process (CDP) hearing.  Requesting a CDP hearing quickly is essential, as it delays the wage levy and gives allows the individual to negotiate with IRS over a tax alternative, or to petition the court that the tax is unreasonable.

How to Fight a Wage Levy After It’s Issued

Once a wage garnishment has been levied by the IRS, it doesn’t necessarily mean that there is nothing an individual can do to solve their tax problems. In fact, there are a number of solutions available to those under a levy, including:

  • Negotiate a collection alternative – These can include offering a compromise with the tax authorities, such as setting up a payment plan which works with your finances.
  • Currently, Non-Collectible (CNC) – An individual may argue to the IRS that they are experiencing financial hardships due to the wage levy and argue the taxes due are currently non-collectible.
  • Bankruptcy – If all other avenues of negotiating with the IRS fail, an individual can file for bankruptcy protection to help solve their tax problems.

Contact an Attorney

If you are facing penalties from the IRS, you need the help of an experienced tax law firm. At Ayar Law, we represent people and business with state and federal tax problems that require creative solutions. We focus entirely on tax problem resolutions and giving our clients a fresh start. We strive to get you the best solution for your individual situation. So, if you’re having tax troubles call Ayar Law today at (248) 262-3400 for a free, no-obligation consultation