Federal Guidelines for Garnishment
If you owe the IRS for back taxes, the IRS has the authority to levy or seize your property. A specific type of levy is the garnishment of employment wages each week. However, before the IRS starts to take wages, there are specific guidelines it must follow.
IRS procedures prior to garnishment
Once the IRS assesses the tax, the taxpayer will generally receive notice and a Demand for Payment of the amount due. If the tax remains unpaid, at some point the IRS will send a Final Notice of Intent to Levy and a Notice of Right to a Hearing. The Notice must be sent at least 30 days before the IRS can garnish wages. If payment is not made, or an Installment Agreement, arranged, the IRS can go forward with collection action.
How much the IRS can garnish
When the IRS garnishes wages, the employer has no choice but to comply and remit a portion of the wages to pay the tax bill. The IRS is not subject to the state and federal garnishment limitations, which means it can leave the taxpayer with very little money each week to live on. During 2015 for example, a single parent with two children who files as head of household can be left with as little as $409 per week. This means that if you earn $1,000 per week, the IRS takes $591 of it, and if you earn $2,000 per week, it can take $1,591. However, the amount of your garnishment will depend on how much tax you owe.
When you can stop wage garnishments
Unless the IRS agrees to an alternative resolution, such as a payment plan, there are a limited number of circumstances that require the IRS to cease garnishing wages before the tax is paid in full. These include:
- The IRS discovers that the time period to collect the tax expired before it served the garnishment notice;
- The IRS did not provide you the full 30 days to respond to the notice;
- You declare bankruptcy;
- The agency is considering an offer in compromise or request for installment plan when an appeal is in process.
Call Jeffrey R. Siegel, your Kansas City Tax Attorney at (913) 735-4829, if you need help.