If you owe IRS any back taxes, the agency has the authority to claim it from you with penalties, fees, or any accrued interest. One of the ways they do it is through a tax garnishment on your income. The agency can garnish other sources of income too, including, commissions, bonuses, etc. But can it lead to you getting fired because of tax garnishment?
With a wage garnishment, the agency applies directly to your employer for the funds. The tax garnishment can continue until all dues are collected with the necessary fees and penalties. This leaves people nervous because now their employer knows about their tax liabilities. Naturally, some may wonder whether it could lead to their termination.
If you’re in such an unfortunate situation, the good news is that you have certain rights under the Consumer Credit Protection Act Title 3.
What is the Consumer Credit Protection Act Title 3?
While laying out several rules for the credit industry, the Act also gives rights to the borrowers. Title 3 of the Act stipulates limits on any wage garnishments, including, how much can be garnished from your salary, and importantly, whether or not you can be fired.
The first part on limits of garnishment doesn’t apply to the IRS as the agency has its own guidelines. But the second part applies to garnishment. Under the Act, you are protected from termination.
Protection from termination
To put it simply, you cannot be fired because of one instance of wage garnishment. Even if there are other levies and liens against your assets, if you have only one garnishment from one debt, you cannot be terminated.
If you get fired, it’s a violation of the law and your employer will face a fine and a potential prison sentence.
What about multiple garnishments?
In case several creditors are enacting wage garnishments, then you are not protected by the Act. Your employer can terminate your services. But some state governments have enacted legislation to protect borrowers even in cases of multiple garnishments. So, you will have to check with your tax relief consultant to see if your state has any such protection.
Fix it early and avoid termination
As with all other situations with the IRS, it helps to fix the problem before it gets serious. If you’re worried that your tax garnishment could create problems at your workplace, the right strategy would be to negotiate a relief settlement with the agency. This could get rid of the garnishment on wages and other income.
Even if you’re not worried about termination, you should negotiate and settle your tax debt before it can pose serious problems. If you don’t have adequate funds, with the help of a tax relief consultant, you could opt for an Offer in Compromise and Installment Agreement.