What is a IRS Wage Garnishment?
IRS wage garnishment is used by the IRS to collect unpaid taxes. It is an extremely aggressive tax collection mechanism on their part that should be taken very seriously. Every effort to resolve the tax situation should be made, as this option is not a preferable method and the IRS would rather resolve the issue by other means.
If you are facing garnishment of your wages, then the IRS has sent you repeated letters and warnings regarding the unpaid taxes and are at a point where there is no other alternative. IRS wage garnishment and levies on property and bank accounts are usually a last resort for the IRS when all other options have been exhausted. It is extremely important to fully understand what it is so that you can avoid it and so that you know what action to take.
Specifically, IRS wage garnishment is a legal method for the IRS to collect the taxes owed them by deducting money from a taxpayer’s wages. It is considered a personal property seizure whereby the taxpayer’s employer will garnish their wages and send the money to the IRS. It is important for a taxpayer to remember that the IRS is not doing this as a means of punishment, they are just trying to collect the money that they are rightfully owed, in accordance with the law.
Calculating the amount of your IRS Wage Garnishment
The amount of the IRS wage garnishment is calculated using a formula that takes into consideration the amount of tax owed and the number of dependents, in addition to other factors involving the taxpayer. Generally, the amount of the IRS wage garnishment is between 30 and 70 percent of the taxpayer’s paycheck. The wages will be garnished from each paycheck until the tax debt is paid off. Since the employer is responsible for garnishing the wages and making the payment to the IRS, there is no getting around it and this can be an absolute nightmare for the taxpayer.
Once again, understand that this is not a form of punishment. The goal of the IRS is to collect their debt and to get the taxpayer back into the tax paying system. This goal provides the taxpayer with an advantage, as it is possible to negotiate the IRS wage garnishment. A taxpayer may represent him/herself and work on negotiations with no outside help, however, this is strongly discouraged because every word and action can be used to the taxpayer’s disadvantage and IRS agents are trained in interrogating taxpayers.
It is recommended that the taxpayer hire a tax attorney or tax professional to manage the case. An experienced tax professional should be able to negotiate the IRS wage garnishment to a significantly lower amount or have it eliminated in exchange for some type of payment plan. The tax professional will also be able to advise the taxpayer if other alternatives are preferable, such as making an offer to the IRS in compromise for the reduction or elimination of the tax debt. In any event, the tax professional will know how to best proceed to rectify the situation.
In dealing with IRS wage garnishment, it is important that the taxpayer act immediately in order to limit the effects of it and understand the process and what it entails to determine the best course of action for the tax situation.