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IRS Stop Garnishment

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What is an IRS Wage Levy?

An IRS Wage Levy, also known as garnishment, is an enforcement action under which the Internal Revenue Service compels your employer to pay your past-due taxes out of your wages, drastically reducing the amount of money showing up on your paychecks.

Can I Stop the IRS from Garnishing My Wages before they do it?

U.S. taxpayers have many options to avoid having the IRS garnishing their wages for past-due tax bills. Depending on the specific situation, these options include an Offer in Compromise, Payment Plans, Penalty Abatement, Injured or Innocent Spouse Relief, Effective Taxation Administration offers and of course paying the IRS tax debt due in full. If, however, the IRS threatens to garnish your wages, or has begun to do so, you still have a number of options to end the garnishment. In almost every case where the IRS has threatened or begun a garnishment action, you will want to consult with a reputable tax lawyer to represent your interests to the IRS.

Before the IRS can begin garnishment, they must determine that you have past-due tax debt, send you a notice demanding that you pay that bill, you must fail to pay the bill within the time the IRS had specified, and finally the IRS has to notify you that they intend to begin a garnishment and that you have a right to a hearing to dispute their intention. If you fail to respond at all of those steps, the IRS very likely will pursue garnishment against you.

How much of my paycheck will the IRS garnish?

Garnishment almost always stands as a very serious situation. IRS wage levies rarely go below 35 percent of the garnishee’s take-home pay, and rarely go above 80 percent.

Do I get any warning about the exact day the IRS will implement wage levy?

No, one day you will suddenly find your pay check dramatically reduced, and at that point you will likely wish you have paid more attention to your IRS tax debt problem and not let the IRS get to the point where they garnished your wages.

Can my employer do something to help me block the tax levy?

No, the employer must follow the garnishment instructions and pay the IRS the tax debt you owe out of your paycheck.

How Do I Stop Garnishment once it begins?

Most of the options for ending a garnishment are the same as those for avoiding it in the first place, such as an Offer in Compromise and Payment Plan. If your financial situation is particularly dire, you may consider filing for chapter 7 bankruptcy or chapter 13 bankruptcy, which may not eliminate your tax debt, but will stop garnishment.

In practically all cases, stopping a garnishment involves negotiating with the IRS, a contest for which you are much better off with the help of a tax advisor or attorney. Such an advocate can sometimes convince the IRS that your situation is such that you will never be able to pay your tax bill, and the IRS will release the garnishment.

Is There Any Way to Stop Garnishment without Negotiating with the IRS?

There are two ways to stop a garnishment without negotiating with the IRS. The first is to declare bankruptcy, as noted above. Remember, though, that bankruptcy will not eliminate tax debt. After your bankruptcy protection from creditors expires, the IRS can resume the garnishment. The other way to stop garnishment is to quit your job. If you find employment elsewhere, or your former employer hires you back, however, the IRS will eventually track you down and reinstate the garnishment.

If I really owe the money and I’m not a candidate for an Offer in Compromise or any of the other methods that might reduce my IRS tax debt, is there some way to at least get the percentage of the garnishment reduced?

Before the IRS begins to garnish your wages, they will send you a Final Notice of Intent to Levy. You have 30 days from the date of the Final Notice to request a hearing. At the hearing, you can argue for a dismissal or reduction of the garnishment for the following reasons:

  • Your tax bill has been paid.
  • You received the Final Notice while in bankruptcy. Garnishments are subject to an automatic stay during bankruptcy.
  • The IRS made a procedural error in an assessment.
  • The IRS sent the Final Notice after the statute of limitations relevant to your tax bill expired.
  • You were unable to dispute the assessed liability.
  • You want to discuss the collection options.
  • You want to make a spousal defense.

Suppose I get have another child or my expenses grow for a good reason, will the IRS consider recalculating the garnishment amount?

If your financial situation changes significantly while the IRS is garnishing your wages, you may be able to negotiate a new arrangement with them.

If I change employment am I under some legal obligation to tell the IRS or is it their job to find me?

If you quit your job and take another, you are not obligated to inform the Internal Revenue Service of your new employment, but the IRS will likely track you down and begin the garnishment again.

If I end up laid off and on unemployment will the IRS garnish a portion of my unemployment check too?

The IRS does not garnish unemployment benefits.

How long does the garnishment by the IRS continue?

Until your IRS tax debt gets paid in full.

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