Wage Garnishments are the collection tool the IRS wields most effectively in the collection of unpaid tax liabilities. After the issuance of the proper notices to advise a taxpayer of the existence of a tax liability and their intent to issue a wage garnishment, the IRS can issue a notice to your employer that compels them to pay over any portion of your non-exempt wages to the IRS on a continuous basis until the tax is either paid in full or the garnishment released.
The IRS will issue out a series of notices beginning with the CP14 to notify a tax payer of a balance due and to warn them of the possibility of a wage garnishment. After the issuance of the CP14 notices, which is the initial balance due notice and demand for payment, the IRS will issue out the CP501 and CP503, which act as subsequent notices of the balance due and demand for payment of the tax. If the tax remains outstanding after the issuance of these notices the next notice is the CP504, which is the Notice of Intent to Levy. The last notice the IRS will send before they can begin garnishing your wages is the LT11/Letter 1158 which is the Final Notice of Intent to Levy. This notice gives the taxpayer 30 days to file a Collection Due Process Hearing Request to contest the issuance of the levy. Once that 30 days has expired the IRS can issue a garnishment to your employer.
Once the employer receives a wage garnishment they will request that you complete a form indicating your filing status and the number of dependents you claim so that they can determine proper amount of income to be exempt from the levy based on your filing status, number of dependents and the frequency of your pay, as outlined in publication 1494. For example, a single taxpayer with 0 dependents who is paid weekly would only have $234.62 exempt from the levy. All gross income after taxes and deductions, above $234.62 per week would be required to be sent to the IRS.
There are methods to get the wage garnishment released. The most common way is to establish an installment agreement for the repayment of the liability. There are several different types of installment agreements that would meet the criteria for the release of a wage garnishment.
If an installment agreement cannot be established, such as where the tax payer has unfiled returns preventing the establishment of an installment agreement or where the taxpayer does not have sufficient income to support an installment agreement, a showing can be made that the garnishment is creating a financial hardship that would require its release under Internal Revenue Code 6343.
If you have received notices from the IRS advising of a balance due or have already had your wages garnished by the IRS please consult a tax practitioner who can act swiftly to evaluate the proper method of releasing the garnishment and to effectuate its release. The tax attorneys at J David Tax Law are experienced at wage garnishments and we can typically get wage garnishments released in 48 hours.