“The thought of getting a letter from the IRS (Internal Revenue Service) is not an exciting one for anyone. The confusion, the anxiety, the assumptions and the fears of all the worst-case circumstances can make you feel like you have a tidal wave of tension is what makes things even harder.”- Jeffrey Schneider
Don’t you agree?
After all, the IRS is one of the powerful agencies of the U.S. federal government. It is never wise to mess with the IRS by not filing your tax returns or, worse, not paying the due amount. In such a scenario, they’ll charge you penalties of non-payment and will also issue several notices. However, if you still fail to pay the tax, the IRS has the power to garnish your wages.
Not familiar with the concept of wage garnishment? No, worries! We’ll explain it to you. Wage garnishment is a legal process in which the IRS gives instructions to the third party (usually the employer) to deduct the tax payable (plus interest and other charges) directly from the bank account or salary of the debtor (employee).
We’re sure that no one would like that. That is why you must pay your taxes on time. But, what if you failed to pay your tax? Or, what if the IRS has issued you notice to pay tax? What can you do in such a scenario to protect yourself?
To know the answer to these questions, keep on reading.
Avoid wage garnishment before it is issued
Generally, when a taxpayer fails to pay the tax after filing the return, their case gets transferred to ACS (Automated Collection System). Within a few weeks, you’ll receive notice from the IRS requesting the payment of the amount you owe. Therefore, to protect yourself, you have to act fast.
- Get in touch with your attorney: The very first thing you have to do when you miss the due date of tax payment is to contact your attorney. They are the expert of this field and “teaches why the IRS garnishes wages” along with helping you to decide the future action plan as per your situation to avoid wage garnishment.
But, hang on! There’s more!
Your attorney can also help you with ‘final notice of intent to levy’ that will give you rights to protect yourself.
- Request hiring: Once’ final notice of intent to levy’ has been issued, you need to file a hiring request within 30 days. By doing this, you’ll be given a platform to negotiate a collection alternative. And also the right to appeal to the tax court. It becomes incredibly crucial if you believe that the IRS is wrong or unfair.
These methods are crucial to avoid further penalties and to stay away from the IRS.
Protect yourself from wage garnishment after it is issued
But, what if it’s ‘too late’ for you to use the measures mentioned above? Unfortunately, in such circumstances, it is impossible to avoid the IRS. Believe it or not, but receiving form 668-W’ notice to levy on wages (wage garnishment)’ is scary. However, it is not a dead-end! You can still protect yourself by taking the following measures.
- Offer in compromise: To settle your tax debt, you can take your attorney’s help and prepare an OIC. It is a great solution for those taxpayers who can’t pay the full amount of tax because of any financial crisis. Generally, it is of three types:
- Doubt as to collectibility (settlement for the amount you can afford),
- Doubt as to liability (settlement for miscalculation of tax amount), and
- Effective tax administration (for exceptional circumstances).
- Payment plan: You can prepare a payment plan, which is usually an instalment agreement to pay all the tax amount and interest due. You can draft the agreement with your attorney’s help and decide on the monthly payment amount that doesn’t affect your credit score.
- Filling out a 433-A or 433-F: By qualifying for these forms, you’ll be able to provide evidence to the IRS that you are facing financial hardship and it is not possible for you to pay the taxes.
- Declare bankruptcy: Last but not least, to protect yourself from wage garnishment, you can declare bankruptcy. It will provide information to the Automated collection system that you are in no way able to pay back (neither partially nor fully).
To sum it up,
Needless to say that you should never take IRS notifications for granted. These notifications are an opportunity for you to pay your dues on time and relieve yourself from further penalties and charges. However, if due to any circumstance, you were not able to pay your tax, consult your lawyer right away and figure out the immediate solution to protect yourself from the risk of wage garnishment.
