How to Prevent an IRS Levy
We all work hard to make a wage or salary, and the last thing many of us want is to see any of that money forcibly taken from us. However, that’s exactly what may happen if your wages are garnished.
When you don’t pay your taxes and don’t respond to a request for payment, the IRS will eventually send out levies to financial institutions or institutions that handle your money, such as your primary bank and even your brokerage or investment companies. A levy may also be sent to your employer (or yourself if you’re self-employed), this is called a “wage garnishment.”
These levies are sent as a means of forcibly collecting your money, and thus a wage garnishment means the IRS will take a percentage of your salary or paycheck in order to pay off your tax debt. Following a series of Collection notices, the IRS will eventually send out a required letter stating they’ll begin to garnish your wages in 30 days, unless you full pay or file a timely appeal.
Unlike other creditors, the IRS doesn’t need a court order to start garnishing your wages.
While a wage garnishment may be less intrusive compared to the IRS seizing your assets entirely, the best case scenario is avoiding this harsh collection action altogether.
How do I Prevent an IRS Wage Garnishment?
1. File your taxes. Even if you don’t immediately full pay your taxes, and instead opt into a payment plan, agreeing to and issuing a method of payment to the IRS should help prevent a wage garnishment. An installment agreement comes with various options, including payment amount and date, while wage garnishments will have a set amount that is enforced by the IRS and associated with your current payroll schedule.
If you’ve already fallen into the wage garnishment hole, the IRS may stop taking money from your wages if you agree to make other arrangements to pay or file an appeal. Ask a qualified tax relief professional for guidance.
2. Ask the IRS to compromise. The IRS doesn’t actually want to garnish your wages if they can avoid it. It’s an expensive process and a hassle for everyone involved. They’re likely to compromise with you and allow you to settle for less than you owe in order to avoid a wage levy, if you qualify for their Offer-in-Compromise program. See a real life example of how a wage garnishment was stopped followed by the $137,967 tax balance being settled for just $864.
3. Borrow and pay them off. You may be better off with a loan you have more control over versus an IRS levy that is almost entirely in the agency’s hands. If you can, borrow the money you need to pay off your taxes and avoid the threat of a garnishment entirely.
4. Negotiate the garnishment. In many cases, the IRS won’t care that they’re taking too much money from your paycheck. If you receive a notice that the IRS is sending a levy to your employer, get the ball rolling and report your income to the IRS if you believe their levy will prevent you from paying basic living expenses – they’re required to review your evidence of a financial hardship. If they agree with your position, they can hold off on the levy for a set amount of time.
If you believe you’re at risk of a wage garnishment, don’t panic. Contact Landmark Tax Group to discuss the best way to prevent enforcement action and put a permanent resolution in place.
Landmark Tax Group is a professional tax resolution firm that specializes exclusively in IRS and State back tax issues. Not only are we licensed Tax Relief Specialists, we are also former Senior IRS Agents who now serve the best interests of taxpayers like you – all we do is handle IRS and State Tax Relief matters, all day, every day.