The IRS is one of the most powerful collecting agencies in the country. Unlike other creditors, when you do not pay your federal tax debt, the IRS can easily garnish your wages or other income without a court order. By law, they are only required to send you a notice before they take action. Although the IRS scares many people, you do not have to be afraid. You do have options when you have tax debt, and you can take action to stop the IRS wage garnishment.
What is IRS Tax Garnishment?
Garnishment is a special type of levy on your assets, typically your wages or salary. A garnishment may also be placed on your tax refund. A portion of your wages is automatically sent to the IRS to pay down your loan. By law, your employer has to comply with the IRS and send this money to the IRS each pay period. This concludes when you pay the debt in full, the IRS removes the wage garnishment, or the statute of limitations ends on your tax debt.
What Rights do You Have?
The Consumer Credit Protection Act (CCPA) Title 3 provides you with certain rights to protect yourself from any garnishment of your wages, including from the IRS. This law limits how much of your wages can be garnished, as well as protects you from being fired. According to the law, you are not allowed to be fired for having one wage garnishment. However, if you have two or more cases of garnishment, then you are no longer protected from discharge due to your financial situation. The law also ensures that you will still have a livable wage, as decided by the government, once the garnishment is taken. However, the maximum amount calculated by this law does not apply to federal tax debt. The IRS has its own method for calculating how much of your wages they can garnish.
What Percent of Your Wages Can be Garnished by the IRS?
The IRS uses a calculating tool that decides how much you need to live. However, this number is often significantly lower than on what most people can reasonable live. The biggest difference between how the IRS calculates how much to garnish as opposed to other creditors is that it determines how much of your wages it can leave, rather than how much it can take. The IRS has a table that calculates the minimum amount on which a person can live, and then will take the rest of your income. The calculations are based upon your filing status, dependents, and standard deduction amount. They take the total of your standard deduction and the amount from any other deductions for the year and then divide the total by 52.
What Can You do?
You can take action to remove a wage garnishment from the IRS in a few different ways. The easiest way is to pay your debt in full. However, for many people, this is not possible. There is still hope. You can work with a tax professional create a tax debt settlement that helps you to pay down your debt without placing you into any type of financial hardship, such as an Installment Agreement or Offer in Compromise. If you believe the IRS has miscalculated your debt, you can file an appeal. You can also apply for a penalty abatement to reduce the amount you owe by removing the penalties and other fees accrued on your debt. These tax debt relief solutions do not hurt your credit, unlike garnishments, and provide ways to finally be free of the IRS.