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IRS Wage Garnishment – What You Need to Know| IRS Wage Levy | Unpaid Taxes | Insight Law June 20, 2012

Posted by Insight Law Firm in Income Tax, IRS, Tax.
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Can the IRS garnish my wages or take my property to repay my tax debts?

Yes!  The IRS has broad authority to collect amounts owed by taxpayers.  Wage-earners should expect the IRS will garnish their paychecks in order to repay the delinquent amounts.  The IRS may also seize and sell your property, including physical assets you have like your car or land you own and other assets like the contents of checking and savings accounts that belong to you.

What is the IRS’ procedure for issuing a tax levy to garnish my wages or seize my property?

Before issuing a levy, the IRS will send you notices regarding the amount of tax owed, requests for payment, and a warning of the intent to levy.  It is important to keep your mailing address with the IRS current so that you receive these notices.  You may also receive phone calls from IRS employees warning of possible levy action.  Unlike traditional creditors, the IRS does not have to go to court before it begins levying your assets and income to collect from you.

Is there anything I can do to stop an IRS levy?

Yes, there are several avenues a taxpayer can take to stop a levy, including a wage garnishment.  These options include:

(1) Requesting a collection due process hearing (or “CDP” hearing) or an equivalent hearing.  In most circumstances, the IRS cannot collect outstanding tax liabilities while a CDP hearing is pending.  These hearings must be requested in a timely manner after receipt of IRS communications regarding an anticipated levy.  If you have missed deadlines to file a request for a CDP hearing, you may also request an equivalent hearing, and the IRS may choose to stop a levy but is not required to do so.

(2) Entering into an installment agreement to repay your delinquent tax liabilities.  Taxpayers with relatively low liabilities (under $50,000) may qualify for a streamlined installment agreement under which they may repay their liabilities without filing the more detailed financial disclosures required to request a traditional installment agreement.

(3) Filing a request for innocent spouse relief addressing the periods with delinquent liabilities.

(4) Proposing an offer in compromise in which you and the IRS agree to settle a tax debt for less than what is owed.

(5) Demonstrating your inability to repay your delinquent tax debts so that you may be placed in currently not collectible status.

(6) Filing for bankruptcy protection, which will suspend collection activity from the IRS and other creditors.

Taxpayers considering seeking relief through any one of the options discussed above, because each contains unique requirements a taxpayer must meet to qualify for relief.  For example, to qualify for an installment agreement, innocent spouse relief, or an offer in compromise,  you must prepare and submit any unfiled returns for all prior tax years.

What if I need more help in addressing an IRS levy or IRS wage garnishment?

To further explore what options are available to stop the IRS from levying your assets or wages, contact a local tax attorney.  Insight Law offers taxpayers in Washington free consultations with a local attorney at (206) 397-4780, or visit our website link below to speak with a tax attorney.

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