How to Avoid IRS Wage Garnishments for Back Taxes
Can the IRS Garnish Your Wages? Yes, they absolutely can.
In 2020, IRS Wage Garnishments are a real threat that must be handled with caution. It’s bad enough to owe the IRS money, but once they start hitting you with Tax Penalties, then finally start coming after your wages, that certainly kicks the stress levels up another notch.
Unfortunately, when you owe the IRS money, and if you refuse to do anything proactive about it, the chances become extremely likely that they will start garnishing your wages, meaning taking funds from your paychecks automatically, before you’ve even been paid.
Fortunately, the IRS’s wage garnishment laws are relatively straightforward, and this post will break down all the rules they have to abide by when garnishing wages, including everything you need to know to avoid having it done to you by stopping IRS wage garnishment before it’s put in place.
But Before I Go Into Detail…
Before I explain how IRS wage garnishments really work, please let me first make a suggestion on how to approach your IRS problems: the fastest, easiest and cheapest way to get rid of IRS debt is going to be paying a hired gun to negotiate on your behalf.
While experts don’t all agree on this strategy, I will tell you that the hired guns can accomplish things that you simply won’t know how to do, or won’t even think of, simply because this is what they do day in and day out, for 40+ hours a week.
How many times have you successfully negotiated a new payment structure with the IRS? Have you ever filed an appeals case against them and won? Do you understand the loopholes, problems and issues with the IRS Tax Code?
Finding the right expert to handle this process for you can make the difference between being stressed out and in debt forever, and getting a settlement that lets you move on with your life! But I only trust one company to help my readers, and that’s the Tax Debt Relief Helpline.
To get the help you need with your IRS debt, please call the Tax Debt Relief Helpline now at 1-888-692-7108.
Before the IRS Wage Garnishment Goes Live
Before an IRS wage garnishment goes into effect and any money is withdrawn from your paychecks, you’ll first receive a notice from the IRS demanding payment of any back taxes you owe, including accumulated interest, fees, penalties, etc.
If you don’t pay what the IRS claims you owe, then you’ll receive two more notices:
- Final Notice of Intent to Levy
- Notice of Your Right To a Hearing
Before the IRS starts garnishing wages, they’re legally obligated to send these two notices via registered or certified mail, and according to wage garnishments, this must be done at least 30 days before they issue a tax garnishment against your wages.
Once the IRS sends you the 30 day notice, you’ll have 30 days to request a Collections Due Process (CDP) hearing by filling out and sending Form 12153. Request for a Collection Due Process or Equivalent Hearing.
My advice to anyone who owes back taxes is to avoid this part of the process in first place by dealing with your tax debt before a wage garnishment is threatened.
Honestly, no one should allow things to get this bad with the IRS, and anyone who plans on having trouble paying what they owe in taxes should immediately contact the IRS to ask about getting onto an IRS Installment Agreement Plan, which allows you to pay off your taxes over a period of several years.
During the IRS Wage Garnishment Process
It’s not easy to stop a wage garnishment once it’s already begun, so again, your best bet is to try and prevent the garnishment from starting in the first place.
Once the garnishment goes live, you’ll really only have three options for getting rid of it:
- Paying your debt in full
- Entering into an installment agreement in a good faith attempt to pay off what you owe
- Appealing the garnishment and convincing the court that you don’t actually owe the money
None of these options are easy to accomplish, and the third is by far the most difficult of the bunch, so be sure to do everything you can to prevent that garnishment from beginning.
If you can’t stop it, here’s what to expect once it goes into effect:
What Can the IRS Garnish?
When it comes to an IRS garnishment, the IRS is legally allowed to pursue your debt by taking “salary” or “wages” away from you.
In this case, salary and wages is used to refer to money that you’re paid for services performed, and essentially, what it means is that the IRS can start intercepting your paychecks to take money away from them before you even receive them.
Wage garnishment laws are pretty open about what they’re allowed to go after, and the IRS can potentially take funds from your monthly, salary, or hourly wages, as well as from checks including commission and bonuses.
By the way, if you think that your employer can refuse the IRS, or will look the other way because they really like you, it’s important to realize that your employer must comply with the IRS’ wage garnishment demand.
Why? Because if they don’t, then they will become liable for the money that you owe the IRS.
How Much Can the IRS Garnish Your Wages?
The IRS sends Publication 1494 to your employer so that they can withhold the correct amount of money from your paychecks.
Some of your wages will be exempt from the garnishment. Basically, the amount you can keep depends on the number of exemptions that you claim.
To find out exactly which wages you’ll be able to protect, you’ll need to refer to the latest IRS Wage Garnishment Table, which you can find here.
Your employer will ask you to sign something called a Statement of Exemptions and Filing Status. If you don’t complete it within 3 days, then your exemptions will be altered to match those of a married person filing separately, and with only one exemption.
Unfortunately, the IRS can take more money out of your paycheck than regular creditors can. In fact, it’s quite possible for an IRS wage garnishment to leave someone with only 30% of their salary to live on, which is obviously pretty low.
It’s also important to note that the IRS doesn’t need to take you to court first before they start garnishing your wages; they can initiate that process entirely on their own!
Can You Stop a Garnishment Once It Has Started?
Once more, let me make this crystal clear: the best time to stop an IRS wage garnishment is before it begins!
That’s why it’s important to contact the IRS immediately as soon as you realize that you can’t pay whatever amount you owe them.
Remember that it’s possible to get put onto an installment agreement (payment plan), but that this is really only offered to people who take care of things in advance.
Please also note that to get on an IRS installment agreement payment plan, you’ll need to be current regarding your tax filings. If you aren’t, then the IRS will simply ignore your request.
The IRS must stop wage garnishment if the following apply:
- They didn’t give you 30 days notice.
- You have declared bankruptcy: This stops an IRS wage garnishment automatically.
- They can no longer collect what you owe because the time period to collect it has expired. This is called the Collection Statute Expiration Date (CSED). As this date approaches you can expect the IRS to get more aggressive about collecting what you owe, for obvious reasons.
- You’ve made an Offer in Compromise. This is when you offer the IRS less than what you owe in order to settle your unpaid tax debt. They can be difficult to get approved, but once you get one put in place, your tax debt will be reduced based on the agreed upon compromise.
- You ask to be put on an IRS installment agreement. Your wage garnishment will stop while the IRS is processing your request.
If an IRS Wage Garnishment is Causing You Financial Hardship
If an IRS wage garnishment is causing you financial hardship (meaning that it’s making it difficult for you to pay for basic necessities, like food, clothing and shelter), then you need to call the IRS immediately and tell them about your situation.
It’s possible for the levy to be released if you’re really struggling, but keep in mind that you’re going to have to prove that the garnishment is basically making it impossible for you to survive.
When you call the IRS, make sure you’re prepared with specific evidence about why you can’t afford to make the payments they’ve demanded, why the wage garnishment is preventing your ability to provide essential goods and services for yourself, and what you propose you can afford instead of what they’re currently taking from your paycheck.
You’ll basically have to make some kind of offer that you negotiate with the IRS, and if you can convince them that they need to take less money from you, then you may be able to prevent yourself from having to choose between eating and electricity.
While you’re talking to the IRS, ask about how you can get onto an installment agreement plan with them. Remember, this does not mean that you no longer owe them money, but it does stretch your payments out over a period of months (or years!) giving you more time to put the money together.
If You Filed Jointly With Your Spouse, but Don’t Feel You’re Responsible for the Money Owed
If you don’t feel that you are personally responsible for the money owed to the IRS and therefore shouldn’t have a wage garnishment against you, then you can apply for Innocent Spouse Relief.
There are three different types of Innocent Spouse Relief on offer from the IRS, each of which could allow you to get all the debt held against you completely discharged.
For details on how this process works, please visit my page about the IRS Innocent Spouse Relief Program.
If You’re Paying Child Support
If you are paying court-ordered child support, then you can ask the IRS to release the levy by whatever amount of money you’re paying to support your child (or children).
The IRS offers this assistance program in order to ensure that back taxes aren’t preventing people from affording to provide for their children.
This is one of the only ways to quickly get rid of a wage garnishment, but remember, it doesn’t mean that your debt gets forgiven, it just delays the payments.
Plus, while it may seem like a great idea to put your payments on pause, keep in mind that they’ll continue collecting interest, fees, penalties and other additional costs.
Is There a Time Limit for IRS Debt Collections?
Yes, the IRS can only pursue your debt for up to 10 years after it was originally created.
That 10 year time period begins as soon as you miss your tax payment and the IRS sends you a bill stating that you owe some certain amount of money.
The actual date shown on this bill the IRS sends initiates your 10 year period, so the trick is to find a way to delay making those payments for 10 years, which would theoretically allow you to force the IRS to write off your debt due to the Collection Statute Expiration Date (or CSED).
However, keep in mind that this is no easy feat, as the IRS pays attention to CSED dates, and start aggressively pursuing any debt that’s approaching them.
Personally, I would recommend against hoping that you can outrun the IRS for the full 10 year period, because these guys live to collect money, and they’re very good at their job.
Do You Have the Right to Representation?
Yes! When negotiating with the IRS, you have a legal right to get someone else to represent you for all communications, negotiations, contracting, etc.
To find someone who can help, I recommend reviewing the IRS’s Searchable Directory of qualified specialists, which lists CPAs, Enrolled Agents and Attorneys who are certified and who the IRS likes working with.
If you do decide to hire someone to help battle against the IRS, then I highly recommend reviewing this list of service providers and choosing someone from it, as you can rest assured that they’re legitimate service providers.
How to Find Out What You Owe
If you’re sure you owe the IRS money, but just don’t know how much (perhaps you “lost” those letters informing you of the debt you owed them?), then you’ll want to contact them directly to get a full accounting.
The best way to od this will be to simply call the IRS hotline at 800-829-1040 and ask them to send you a copy of whatever bills they previously attempted to get to you.
Make sure that you’ve got all your relevant details on hand during this call, as you’ll certainly have to be able to provide your name, social security number, etc. to verify that you’re really yourself and not a scammer!
Do Not Try to Scam the IRS! (Seriously!)
Because garnishments are specific to employers, some people attempt to delay a wage garnishment by changing employers.
Sure, that might work for a few months. However, eventually the IRS will find out and the wage garnishment will start up again.
Other people facing IRS wage garnishments attempt to lower their income so that the IRS will see them as uncollectable.
Be careful with this option too, because if you have any assets like stocks, bonds, real estate, valuables, etc., then the IRS will just go after those instead of your wages.
In a nutshell, wage garnishments aren’t easy to get rid of once they’ve already begun, so the best approach to dealing with the IRS is to pick up the phone and simply give them a call the second that you think you’ll be missing those future payments.
Where Can I Go For Other Questions?
To get effective IRS Debt Relief, first, visit the other pages of my site, where I explain IRS debt relief programs, opportunities and processes in extreme detail.
Specific pages that you’ll want to review include my Guide to IRS Tax Penalties, my Guide to Filing & Paying Back Taxes, Applying for IRS Tax Debt Forgiveness, Reaching an IRS Tax Debt Settlement, Picking an IRS Tax Resolution Service, and utilizing the IRS Fresh Start Program.
If you have questions about how the IRS collects their money via wage garnishments, then please visit my page on the IRS Tax Collections Process.
One other place to seek additional details is the IRS’s Taxpayer Bill of Rights, which is definitely worth a read, especially if you owe a ton of cash and think they’re about to come after you.
For any other questions about IRS debt, please post them in the Comments section below and I’ll do my best to get you a response within 24 hours!
Disclaimer: Information obtained from Forget Tax Debt is for educational purposes only. You should consult a licensed financial professional before making any financial decisions. This site receives some compensation through affiliate relationships. This site is not endorsed or affiliated with the U.S. Department of the Treasury, the IRS or any other Government Organization.