Facing an IRS wage garnishment can feel like an impossible challenge. This occurs when the IRS takes a portion of your paycheck directly to settle unpaid tax debts. Many taxpayers in this situation feel confused, angry, and overwhelmed.

At Gordon Law, we understand the stress and uncertainty that comes with wage garnishment. We provide clear guidance to help you understand your rights, options, and the steps you can take to address this situation.

In this guide, we’ll walk you through the process of IRS wage garnishment and how you can stop it.

What is IRS Wage Garnishment?

IRS wage garnishment is a process used to collect unpaid taxes directly from your salary or wages. This means the IRS will contact your employer directly and require them to withhold a portion of your paycheck. The withheld funds are then sent directly to the IRS to reduce the tax debt.

Unlike other creditors, the IRS does not need a court order to initiate wage garnishment. State revenue boards can also garnish wages to collect overdue state taxes.

Wage garnishment can significantly reduce your take-home pay. The amount garnished depends on several factors, including your filing status, number of dependents, and your standard deduction amount. The IRS can continue to garnish your wages until your tax debt is paid in full or until you reach a resolution with the IRS.

Wage Garnishment vs. Tax Levy

“Wage garnishment,” “wage levy,” and “tax levy” are often used interchangeably. Tax levies and wage garnishment are both methods the IRS can use to collect tax debt. However, they’re not always the same thing.

• Wage Garnishment: A wage garnishment, or wage levy, specifically refers to the IRS taking a portion of your paycheck. This affects multiple pay periods until you satisfy the debt or make another arrangement.
• Tax Levy: A tax levy is a broader term for the legal seizure of property to satisfy a tax debt. This can include taking money from your bank accounts or seizing physical assets like cars and real estate.

In other words, wage garnishment is just one type of tax levy in the IRS toolkit.

When Does the IRS Garnish Wages?

The IRS resorts to wage garnishment only after several attempts to collect unpaid taxes have been unsuccessful. Many taxpayers feel overwhelmed by IRS notices and simply ignore them. Unfortunately, this makes it more difficult (but not impossible) to resolve your tax debt. As with any tax problem, the earlier you act, the more options you’ll have.

Here’s a step-by-step overview of when the IRS may decide to garnish wages:

1. Tax Debt Assessment: First, the IRS determines that a taxpayer owes taxes. They send an initial bill or notice to begin the collection process.
2. IRS Notices: The IRS typically sends a series of 3-4 notices before moving on to wage garnishment. The notices tell you the amount of tax due, IRS penalties and interest, and the impending action if the debt remains unpaid.
3. Notice of Intent to Levy: Before garnishing wages, the IRS must send a letter called Final Notice of Intent to Levy and Notice of Your Right to a Hearing. This gives you 30 days before the garnishment begins. You can prevent wage garnishment by paying the debt or making other arrangements before the 30-day deadline.
4. Failure to Pay: If you don’t pay the debt, make arrangements to settle it, or respond to the final notice, the IRS may proceed with wage garnishment. At this point, the IRS will contact your employer directly to begin the garnishment process.
5. Continuous Garnishment: The wage levy continues until the full debt is paid or until you make alternative arrangements with the IRS. This could include setting up a payment plan or negotiating an offer in compromise.

Pro Tip: The IRS prefers to work with taxpayers to resolve tax debts and typically views wage garnishment as a last resort. At every stage of the process, you have options to prevent wage garnishment. You can set up a payment plan, dispute the tax debt, or possibly settle with the IRS. The earlier you take action, the better your chances of a favorable outcome.

How Much Can the IRS Take from Your Paycheck?

There’s no simple percentage or flat rate that the IRS can deduct from your paycheck—it’s based on your disposable income after deductions and the national standards for living expenses. The IRS determines the amount it can garnish from your paycheck using specific calculations. They account for your filing status, number of dependents, and standard deductions.

Once the IRS has started wage garnishment, your pay stub will show how much is being deducted. The IRS caps wage garnishment at a portion of your disposable income. They try to ensure you have enough left to cover basic living expenses.

How Can I Stop IRS Wage Garnishment?

If you’re facing IRS wage garnishment, it’s normal to feel overwhelmed. However, there are several steps you can take to halt the process, offering a path toward financial stability:

• Pay the Debt in Full: Paying your tax debt in full is the simplest way to stop IRS wage garnishment immediately. Of course, this may not be possible for everyone.
• Set Up a Payment Plan: The IRS offers installment agreements, allowing you to pay your tax debt over time. Once you’ve established this plan, the garnishment will cease, giving you breathing room to manage your finances.
• Offer in Compromise: If you can’t pay your full tax debt, you might qualify for an Offer in Compromise. This agreement lets you settle your tax debt for less than the amount owed, based on your ability to pay. Please note that the IRS has strict requirements for an Offer in Compromise. It’s best to work with a tax attorney for the application.
• Apply for Currently Non-Collectible Status: If you’re facing economic hardship (according to specific IRS definitions), you may qualify for Currently Non-Collectible (CNC) status. This status temporarily halts collection efforts by the IRS, giving you time to improve your financial situation. While in CNC status, it’s crucial to review your financial situation periodically; the IRS will do the same to decide if collections can be resumed.
• File for Bankruptcy: Bankruptcy might halt wage garnishment, but it’s a decision with profound implications. Not all forms of bankruptcy will erase tax debt. Consult with a professional to understand the full impact on your financial future.
• Correct Tax Liability Errors: Mistakes happen. If you believe your tax debt results from an error, you may be able to contest the tax debt and potentially stop wage garnishment.

Remember, you’re not alone in this. Our experienced tax attorneys can help you find clarity and peace of mind. We’ll help you navigate these options and find the best solution for your unique situation.

Let’s get to work to help you regain your financial footing.

Facing Wage Garnishment? Gordon Law Can Help

Navigating IRS wage garnishment can be daunting, but you don’t have to face it alone. Gordon Law provides the support, knowledge, and skilled representation you need to address wage garnishment effectively. We’ll work toward a resolution that fits your needs.

Our team is well-versed in tax law and has extensive experience helping individuals negotiate with the IRS. Here’s how we can assist you:

• Assessing Your Situation: We start by thoroughly reviewing your financial situation, tax debt, and any previous IRS communications to understand the best course of action.
• Payment Plan Negotiation: If an IRS payment plan is the right solution for you, we’ll work on your behalf to negotiate terms with the IRS that work for your financial situation.
• Offer in Compromise: For those who qualify, we can help prepare and submit an IRS Offer in Compromise. This is the “Holy Grail” of tax debt resolution. An Offer in Compromise can potentially reduce the amount you owe. In some cases, you can settle with the IRS for pennies on the dollar.
• Applying for CNC Status: If you’re facing financial hardship, we can help you apply for Currently Non-Collectible status. This provides you with temporary relief from tax debt payments.
• Dispute Resolution: If there are discrepancies or disputes regarding your tax debt, our team can advocate on your behalf. We’ll protect your rights throughout the process.
• Tax Advice: Beyond resolving current issues, we also offer advice to help you avoid future tax problems, ensuring you’re in a better position moving forward.

At Gordon Law, we understand the stress and uncertainty that comes with IRS wage garnishment, and we’re here to provide a path forward. Our tax debt attorneys have saved clients millions in taxes and penalties. Consider us your secret weapon against the IRS!

Reach out today to see how we can help you take control of your tax situation and regain peace of mind.