If the IRS has sent you a wage garnishment notice because of back tax debt, it can be very stressful, not to mention embarrassing. After all, you don’t want your boss-or even just the H.R. department-to know you’re behind on taxes, right?
Well, unfortunately, your employer does find out about a wage garnishment, mainly because the IRS sends specific instructions to your employer that they must follow in order to determine the garnishment amount to be withheld from your paycheck. The best thing you can do is to take steps to avoid wage garnishment in the first place, or at least try to deal with the issue head on. Just don’t ignore the problem!
Take action on the first IRS lien notice. Wage garnishment is typically a last ditch effort by the IRS to squeeze your tax debt out of you when they haven’t been successful in getting you to pay. Remember that the IRS will pursue wage garnishment when they cannot seem to get you to pay your tax debt within a certain timeframe. If you have been ignoring their letters, you put yourself in a weaker position. Do your best to stay in touch with the IRS and work on settling your debt. If you have an outstanding debt contact a tax professional to see which IRS agreement would be best for you.
HERE ARE SOME WAYS TO MANAGE A BAD FINANCIAL SITUATION:
Pay Taxes in Full
Once taxes have been paid in full, the wage garnishment will immediately stop.
Enter Into an Installment Agreement
An installment agreement is a plan between you and the IRS that says you will pay your tax debt in monthly increments until everything has been completely settled. Once an IA is accepted the wage garnishment will be stopped. As long as you maintain your monthly payments and do not default on you agreement, you will remain in good standing with the IRS.
File for an Offer in Compromise
An Offer in Compromise allows taxpayers to settle their back taxes for less than total amount that they owe. It sounds like an ideal situation, but it is a very hard filing to obtain. Only a small portion is actually accepted by the IRS. If you are considering this type of filing, you should consult with a tax attorney to see if you are a likely candidate. If your offer is accepted, you will be considered in good standing with the IRS and no wage levy will exist.
Apply for Currently Non Collectible Status
If you truly cannot pay your IRS tax debt you can file for currently non collectible status, but you must prove to the IRS that the garnishing of your wages is unfair due to financial hardship. If the IRS accepts your claim the garnishment will be stopped. However CNC status is only a temporary solution and does not resolve your tax problems. The IRS will reassess your situation at sometime in the future to determine if you are in a financial situation where it would not cause financial hardship to collect.
IRS wage garnishments can be very overwhelming. It is important to act fast when dealing with back tax debt to limit the effectiveness of this collection method. It is highly suggested that you consult with a qualified and reputable tax professional when dealing with IRS garnishment. They can quickly analyze your financial, tax, and work situation to find the best tax solution for you.
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