A wage garnishment is a seizure of your wages to satisfy a tax debt. The IRS must meet several legal requirements before the IRS can levy your wages.
Some of those requirements and defenses are:
- Your wages were levied while you were in bankruptcy
- The IRS did not send you the proper notices (procedural error)
- The time to collect the tax (a statute of limitations defense) has expired
- You have a spousal defense (such as innocent spouse relief)
The IRS may lift the garnishments for other reasons as well. In some circumstances, if the garnishment is causing an economic hardship the garnishment can be lifted. There are other legal options that our attorneys can discuss with you during a free consultation.
The wage garnishment is an ongoing levy, so it will effect your paycheck until the debt is paid off. The IRS garnishment is very severe and only allows you to keep a small portion of your wages:
- If you are single with no children you can keep only $833.33 dollars a month (the exempt portion).
- If you have a household of four, you can keep only $2,316.67 dollars per month (the exempt portion).
You will still have to pay tax on your total wages.
Our IRS wage garnishment attorneys, lead by lawyer Bill Henry in our Castle Rock office, can help you resolve your back tax issues. Call (303) 688-0944 now for a free consultation today to help stop IRS wage garnishments
What is a levy or IRS garnishment?
A levy or IRS garnishment is a “legal seizure of your property to satisfy a tax debt.” A levy is not to be confused with a lien. A lien is a legal claim on your property that is used as security for a debt. A lien protects the government’s ability to collect the money it is owed. In contrast, a levy is the actual taking of property to satisfy that debt.
If you do not pay your taxes or make other arrangements to settle your debt with the IRS, the government may levy or garnish your property. A levy consists of the government seizing and selling any type of real or personal property that you own or have an interest in. For example, the government may seize and sell property that you own such as a home or a car. Additionally, the government could levy property that is yours but is currently held by someone else such as wages, bank accounts, or accounts receivables.
How do I know if the government will levy my property?
The Fifth Amendment to the U.S. Constitution prohibits the government from taking an individual’s property without due process of law. Accordingly, the IRS must follow certain procedural requirements in order to legally levy your property.
The IRS will only garnish your property after three requirements are met.
- First, the IRS must determine the amount of taxes owed (also known as a tax assessment) and send you a “Notice and Demand for Payment.”
- Second, you must fail to pay the tax owed.
- Third, the IRS will send you a “Final Notice of Intent to Levy and Notice of Your Right to a Hearing” (also known as a “Levy Notice”). The Levy Notice must be sent at least 30 days before the levy and may be given to you in person, left at your home or usual place of business, or sent to your last known address by certified mail.
Is there anything I can do once the government decides to garnish my wages?
Tax levies and garnishments can send your life in to financial and emotional disarray. Once a tax has been assessed and the government begins the levy process, many people believe that they have entered in to a losing battle. However, there is some room to negotiate. Under federal law, the IRS must allow you to formally protest the amount of taxes owed and the collection processes used to satisfy your tax debt.
This is where the attorneys at Robinson & Henry can help. We can assess your case and determine the best course of action. These resolutions can take a variety of forms such as:
- Procedural defenses if the IRS did not send you the proper notices or made an error in the tax assessment
- Negotiating with the IRS to reach an installment payment agreement
- Enforcing the automatic stay arising from bankruptcy proceedings
- Statute of limitations defense if the time limit for collection has expired
- Taking legal action in tax court, federal court, or bankruptcy court to protect your rights and your family.
If you wish to dispute an IRS levy, you must act quickly. There are strict time limits on when you must reply to a Levy Notice and the IRS can act quickly and decisively. As soon as you realize you may have a tax problem or receive a levy notice from the IRS, you need to seek legal advice.
What if I cannot afford to pay my tax debt right now and the levy on my wages or bank account is having a major impact on my life?
If a levy on your wages, bank account, or other property is creating an immediate economic hardship, the levy may be released. A levy release does not exempt you from paying the balance but the IRS will work with you to establish a payment plan or take other steps to satisfy the debt. The experienced attorneys at Robinson & Henry can review your situation, determine what courses of action may be available to you, and negotiate with the IRS on your behalf.
Remember, past results are not a guarantee of results in future matters. Every case is unique, and we need to meet with you to discuss your options. The initial consultation is free; call 303-688-0944 to schedule yours today.