If you’ve received notices in the mail that IRS wants to garnish your wages, you probably have a lot of questions about why this is happening and how you can stop it. Wage garnishment is a collection practice the IRS uses to notify your employer to send a portion of your earnings directly to the government as payment for your tax penalties or debt.
For those who move around a lot or forget to update their address with the IRS, the first time they may even become aware of a wage levy against them is when their employer notifies them of the deduction from their earnings. This can be an embarrassing situation at the very least, but the problem at hand can spiral out of control if action isn’t taken soon enough.
You can act now by becoming more aware of the basics of wage garnishment and how it can affect your life. Then, reach out to our qualified tax attorney at Damiens Law Firm, PLLC for help with challenging the IRS’ wage levy against your or claiming valuable income exemptions that can protect you from further financial hardship.
Can the IRS Really Just Take My Paycheck?
Yes. Wage garnishment is a legal debt collection tool that both the IRS and private creditors can use. If you are subject to a wage garnishment for unpaid tax penalties or debt, the IRS or creditor will seek payment by instructing your employer to directly pay them a certain amount of your earned wages.
Does the IRS Need a Court Order to Garnish Wages?
No. While your credit card company, mortgage lender, or another private creditor would need to take you to court and get permission to garnish wages, the IRS does not. You can, however, expect to receive sufficient communication from the IRS before it begins garnishing your wages.
How Much of My Income Can the IRS Take?
There is no standard percentage of what can be garnished, but the IRS may be permitted to take a little more than private creditors could. The amount of money the IRS can take from your paycheck is the result of a complicated calculation that determines how much of your income is exempt from wage garnishment. The non-exempt portion may be claimed entirely by the IRS.
Are There Any Exemptions Available?
Yes. Although it’s more difficult to provide a clear answer as to how much the IRS can garnish from your wages, the amount that can be claimed as exempt is a little more discrete.
The following portions of income can be claimed as exempt from wage garnishment:
- About $12,200 annually for individuals filing as singles without any dependents
- About $26,650 annually from a head of household’s income with two dependents
- About $32,700 annually from a married persons jointly filing with two dependents
These values reflect exemptions for tax year 2019 and are likely to shift year-to-year. Regardless, these figures can provide a rough estimate of what to expect so you can budget accordingly.
If I Earn a Bonus at Work, Will I Get to Keep It?
Probably not. Bonuses, commissions, fees, and other types of compensation can all be garnished from your paycheck. If your bonus is not exempted from wage garnishment, it can be claimed by the IRS in its entirety.
How Often and for How Long Will the IRS Garnish My Wages?
As a continuous tax levy, you can expect the IRS to garnish your wages from every paycheck until your tax debt is satisfied or you take other actions to comply with the IRS.
A wage levy can stop – even if you still owe tax debt – if any of the following occur:
- The IRS accepts a payment agreement that will whittle away at your tax debt over time
- You can prove that wage garnishment is causing financial hardship
- You file an offer in compromise, which is an agreement with the IRS to settle a tax debt for less than what’s really owed
- You file for bankruptcy
- You can prove in tax court that the wage garnishment against you was done in error or as a violation of the law or the IRS’ own procedures
Exactly How Will the IRS Notify Me of Wage Garnishment?
The IRS will send a series of at least three notices to your last-known address before it engages in wage garnishment.
In order, these notices will include:
- A demand for payment (CP14, CP501, CP503)
- A notice of intent to levy (CP504)
- A notice of your right to a hearing for due process collection (LT11/Letter 1058), which will be sent via certified mail
After your receive an LT11/Letter 1058, you can expect the IRS to begin taking a portion of your paycheck two weeks after your deadline to request a hearing has elapsed.
Do I Have a Chance to Fight against Wage Garnishment?
The LT11/Letter 1058 will have information about how you can ask for a hearing to request a payment agreement for your unpaid taxes or to challenge the IRS’ assertion that you owe anything at all. The hearing must be requested within 30 days of the notice date. Wage garnishment will take place about two weeks after this deadline.
What Do I Do When I Start Receiving These Notices from the IRS?
If you receive any notices from the IRS threatening wage garnishment or a tax levy against you, consult with a tax attorney as soon as possible. These professionals are uniquely qualified to handle this serious legal and financial problem. Many people don’t know how to deal with the IRS when they’re faced with a problem like this, which can make their situations more stressful and even worse.
At Damiens Law Firm, PLLC, we work with clients like you who have faced wage garnishment from the IRS. No one wants to be in this position, but it can be made easier by having a professional legal advocate in your corner making sure you are being fairly treated by the IRS when it seeks wage garnishment. We can help you claim exemptions or review the underlying reasons why you’re facing a wage levy to ensure your interests and financial well being can be as protected as possible in your unique situation.