If you have received a Notice of Intent to Levy from the IRS, the experienced tax attorneys at Wiggam Law can help you negotiate payment plan strategies, and prevent wage garnishment and levies against other assets.
If you don’t pay your taxes, the IRS has the power to garnish your wages as well as levy or seize other assets, such as your bank accounts, real estate, or automobile. One of the keys to avoiding IRS wage garnishment or other IRS levies is to be proactive and communicate with the IRS. If you cannot pay your taxes, don’t just ignore IRS letters, billing notices, or even the notice of a potential IRS wage levy. Pay as much of your tax bill as you can and reach out to the agency about options for resolving the rest of your tax debt. Consider hiring an experienced tax attorney, who knows the specific rules and intricacies of negotiating payment plans with the IRS.
What is an IRS Levy?
An IRS levy is an action by the agency to collect an unpaid tax debt. A levy is different from a lien. A lien is a claim against your property or wages to secure payment. A levy is the actual movement by the IRS to do so.
The IRS generally will only levy your assets or wages after all of the following have occurred:
- The agency sent you a tax bill, otherwise known as a Notice and Demand for Payment.
- You ignored the bill or refused to pay the taxes due.
- The agency sent you a Final Notice of Intent to Levy, and Notice of Your Right to a Hearing at least 30 days prior to any levy.
- The IRS sent you a Third Party Contact notice, alerting you that it would attempt to collect your tax debt from a third party.
What is IRS Wage Garnishment?
The IRS can take a portion of your paycheck to satisfy your unpaid tax debt. When the agency does so, it will send an IRS levy notice (Form 668-W) to your employer with instructions to send part of your paycheck to the IRS. In addition to your salary and other wages, the IRS can also garnish retirement or pension income. As if to add insult to injury, the garnished wages are still taxed. When you receive your W-2 at the end of the year, the portion of income paid to the IRS will be included in total earnings and you will owe taxes on it even though it never entered your bank account.
The IRS generally takes a quarter of your paycheck or more each pay period. The agency uses a formula to calculate the portion of your wages exempt from the levy. In addition to other factors, the formula considers your dependents and the standard deduction for your filing status.
How to Stop an IRS Tax Levy
The best way to stop an IRS tax levy or garnishment of your wages is to respond to the agency as soon as you receive a notice of tax debt—the IRS must follow a specific timeline when garnishing your wages. Even if you cannot pay any of the debt immediately, you can negotiate with the IRS to set up a payment plan or other settlement agreement.
Options include:
- Short-term payment plan (120 days or less)
- Long-term payment plan or installment agreement (monthly payments to pay back total debt within six years)
- Offer in compromise to lower your overall debt and pay the balance in installments
All options require application with the IRS. The offer in compromise is a negotiation, where the IRS will consider your income, expenses, financial situation, and assets. An experienced tax attorney can help choose the best option for your circumstances, and negotiate with the IRS.
Can a Garnishment be Reversed?
Once started, a garnishment can be reversed by paying your tax debt or negotiating one of the payment options. How quickly this happens depends on how long it takes to negotiate the payment plan. An immediate or short-term payment plan will generally lead the IRS to immediately release a wage garnishment. An offer in compromise can sometimes take six months or more to negotiate, so reversing the garnishment will take at least that long. An experienced tax attorney can help you prepare for the negotiation and reach a quick and agreeable debt settlement as well as a payment plan so that you start receiving 100% of your paycheck again.
If you owe taxes and need help negotiating a payment plan or offer in compromise, or have received a notice from the IRS of potential wage garnishment, contact the experienced tax attorneys at Wiggam Law. We can help you evaluate your options and negotiate with the IRS. Give us a call today at (404) 233-9800 to get started.