Getting a levy or garnishment released is one of the most urgent financial matters a taxpayer may ever face. Taxpayers with delinquent tax debts may one day wake up, only to find that their bank account has been seized or their paycheck garnished. Having the balance of their bank account taken or losing a paycheck, to most people, is the most paralyzing and devastating situation they will ever face. There are bills to pay but no money in the account or funds in their check to pay them. Understanding the process by which these collections actions can be reversed is pivotal to overcoming the dramatic effects of a levy or garnishment.
A levy issued to a bank account is a one-time action designed to seize the funds in that account to pay toward the tax debt. Because it is only a one-time action, rather than a continuous action, there is a heightened burden to get the levy released. However, the IRS is required to release the levy to the extent necessary to prevent the levy from causing a financial hardship. If the taxpayer can demonstrate that the levy is causing a financial hardship, by showing that the levy of those funds would prevent them from being able to pay for their reasonable and necessary living expenses, then the IRS would be compelled to release the levy, to whatever extent necessary, to alleviate that hardship.
A wage garnishment, unlike a bank levy, is a continuous action. When an employer receives a Notice of Levy, they are legally compelled to pay over the amount of non-exempt funds in the taxpayer’s paychecks until either the tax debt is paid in full or the IRS issues a release of that levy. Because of the continuous nature of a wage garnishment and the devastating effects, the continuous loss of income can cause taxpayers, the IRS is much more lenient in releasing that garnishment. Not only will the IRS release the garnishment to the extent necessary to alleviate any financial hardship it may be causing, but they will also release the garnishment if the taxpayer establishes an installment agreement to repay the debt, regardless of whether the garnishment is causing any type of financial hardship.
It is vital that, as soon as a bank levy or wage garnishment is issued, action is taken immediately to either demonstrate that the action is causing a financial hardship or establish an installment agreement, so as to reverse the levy or garnishment. Financial institutions are required to remit the funds captured from a bank levy 21 days after receipt of that levy and employers have deadlines set to submit payroll for processing.
Therefore, there is an absolute urgency in properly addressing a levy or garnishment to ensure they are released. If you have had a levy issued to your bank or a garnishment attached to your wages please contact a tax practitioner who can act swiftly to reverse these actions. The tax attorneys at J David Tax Law can help with levy and garnishment release. In most cases, we can get wage garnishments released in 48 hours.