What is a Wage Garnishment?
A wage garnishment is one of the most powerful collection tactics used by the IRS because it takes your money before you ever receive it. Your wages are transferred directly from your employer to the IRS in order to satisfy your delinquent tax debt.
You should receive several notices from the IRS before the wage levy takes effect. The last notice should be a “Notice of Intent to Levy”. If you get this notice, you need to take action right away to avoid an IRS wage garnishment.
Request a CDP Hearing Within 30 Days
Once you receive the levy notice, you have 30 days to request a collection due process (CDP) hearing. You should absolutely request the CDP hearing because it delays the wage levy and gives you time to offer the IRS a collection alternative.
Unlike a bank account levy, a wage garnishment is an ongoing levy. That means that the IRS will keep taking money out of every single paycheck until your tax debt is paid off. Depending on how much you owe, this could take years.
Call a tax debt attorney immediately if you receive a levy notice. There are many different options available to avoid the levy. At the very least, you can usually negotiate an installment agreement, which allows you to make money payments on your delinquent tax debt.
It’s always better to voluntarily make tax debt payments than to have the IRS forcibly remove money from your paychecks.
How Much Does the IRS Take From Your Wages?
There are IRS rules that limit how much that they can take from each paycheck. Publication 1494 shows how much of your income is exempt from the wage levy based on your filing status and number of exemptions.
For example, if you are single with no dependents, 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 a mortgage payment for many people.
The rest of your wages goes to the IRS. If you get a performance or year-end bonus, the entire amount goes towards your tax debt.
It’s best to avoid a wage levy before it happens, but you can also negotiate with the IRS after the levy has started. Consult with a tax resolution attorney to learn more about your options for stopping or removing the wage garnishment.
Get free tax advice from a Michigan tax lawyer by calling Ayar Law at 248-262-3400 today.