IRS garnishment is a serious legal situation that affects financial stability and life. However, you can protect some or all of your income from garnishment in several ways.
Keep reading and learn your options to take prompt action about how to stop IRS garnishment.
What is IRS Garnishment?
With tax lien, the IRS makes a legal claim on the taxpayer’s property to meet a tax debt. They can place liens on valuable assets, such as real estate, jewelry, art pieces, or antiques. However, when a lien has been placed, the IRS does not buy or sell the asset until the debt is paid.
If the debt still is not unpaid, the IRS may take an action. One of them seizing property. With seizure, the IRS actually seizes any physical property. Then, the IRS can sell your assets to collect the debt. However, it is mostly rare action, because before it, the IRS adopt tax levy or wage garnishment ways.
An IRS levy is a single action by the IRS to seize a specified sum from a taxpayer’s income tax refund or bank accounts. Yet, garnishment is a type of levy. That is, the IRS places liens on incomes such as retirement, rent, wage, or salary. Garnishment (especially IRS wage garnishment) is the type of action most preferred by the IRS. Therefore, they take the money directly from paychecks, but they leave a small exemption for living expenses.
Additionally, when you owe a debt to a creditor, officials send you one last letter (a demand letter) before they begin the legal process. On the contrary, the IRS does not need a court order for a tax levy. Still, they send you a Finale Notice of Intent to levy with a 30 days notice. Once you get it, you should not ignore because, in this process, you can stop or negotiate for your future.
How Much of Your Wages Can Be Garnished?
The maximum amount that can be taken from your salary will depend on your income. However, even if the IRS place a garnishment on your wage to collect your tax debt, they leave the minimum amount for living, called the exempt amount.
How do you know if the IRS will garnish your wages?
The IRS hands over or mails a Final Notice of Intent to Levy to your last registered address or workplace. With this notification, you should know that the legal proceeding starts after 30 days. That is, you need to take action to stop IRS garnishment within 30 days.
Also, the IRS sends from 668-W to your employer to start garnishment. After that point, the employer must send the money to the IRS, or it may be penalized.
Feeling Overwhelmed?
How to Stop IRS Garnishment: Tax Debt Solutions
Immediate Actions to Stop IRS Garnishment:
Pay Off the Debt
The court will stop the garnishment if the debtor pays off the debts, including court costs. However, this can be difficult for people with bad financial standing.
Borrowing Money
If there are alternatives to finding the money, paying off the debt would be the fastest way to stop the garnishment. For example, borrowing money from someone else, like family members. Even though you will owe another person this time, you will avoid lowering your credit score.
Work Directly with the IRS:
- Receiving Notices and Responding: The IRS sends at least four letters in 5 months before levies begin. They allow 30 days to start the process after the last Final Notice of Intent they sent. If you don’t take any action within this time, the IRS will now automatically initiate the process.
- Requesting a Collection Due Process (CDP): You can also stop the garnishment by requesting a CDP by the last letter. The form 12153 is used to request a CDP. However, you have 30 days for this request. If tax laws stress you, it would be easier to work with a tax lawyer.
- Disqualified Employment Tax Levy (DETL): If a taxpayer has had a Collection Due Process (CDP) hearing about payroll taxes and incurs another payroll tax debt within two years, the IRS can levy immediately, without waiting 30 days.
Payment Solutions
New Installment Payment:
You can discuss with the IRS a new payment plan that fits your financial situation. For this, you need to contact the IRS and prove that you cannot pay your debt once. When you make installments, you have to pay on a monthly basis until your debt is closed.
Offer in Compromise
You can offer a settlement to reduce the amount you owe the IRS. Of course, they do not allow this opportunity for everyone. They will check if you’re eligible for Offer in Compromise. However, the IRS will stop the wage garnishment while your application is being reviewed.
“Meet Basic, Reasonable Living Expenses” Situation:
You can also temporarily stop the IRS from placing a lien on your paychecks if you are in financial trouble for a pay lien. To report this, you need to phone the IRS directly. Of course, you have to prove this with documents. While the IRS will not temporarily withhold your paycheck, that does not mean the case is closed. You still have to find a new way to pay off your debt and create a new IRS payment plan.
File for Bankruptcy
Filing for bankruptcy for tax debt generally immediately stops garnishments. Depending on the type of bankruptcy you qualify for, you can have a new debt restructuring that suits your financial situation, liquidate your assets to pay off, or discharge your remaining debt.
We recommend that you consult with a lawyer to clearly understand whether the bankruptcy option is the right decision.
Does Quitting the Job Stop the IRS Tax Garnishment?
Yes, quitting your job may stop wage garnishment, but it is not recommended as the IRS will find other methods to collect your debt.
Next Step: Get Help from A Legal Service Today
Need help keeping up with your financial obligations? And, looking to get rid of garnish? We are available to talk anytime. We want to help you and offer a free consultation. Contact us now.
