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Understanding IRS Levy on Wages and How to Deal with It
The Internal Revenue Service (IRS) can levy, garnish, or legally seize any income you make to satisfy federal tax debt or taxes owed. This includes your hourly wages, salary, commissions, and bonuses. The IRS can contact your employer directly and require them to send a portion of your income to the IRS to cover your tax liability. Employers are legally obligated to comply with this request, typically within one pay period of receiving the notice from the IRS.
Unlike most creditors, the IRS does not need to take you to court to obtain a judgment to levy your wages. Furthermore, the IRS can garnish a more significant portion of your wages than a regular creditor can. While the law limits the amount a regular creditor can garnish from your wages, these limits do not apply to the IRS. The tax code requires the IRS to leave you with a certain amount of income after garnishing your wages to pay your tax debt based on the number of exemptions you claim for tax purposes. Unfortunately, an IRS garnishment can amount to 70% or more of your income, leaving you with a significantly reduced paycheck.
IRS Collection Actions and Enforcement
IRS collection actions can include levies on property, wage garnishment, and other enforcement actions to collect unpaid taxes. When the IRS levies your property or wages, it seizes assets or income to satisfy your tax debt. The agency can levy bank accounts, salaries, and other assets without court approval. This is part of the IRS’s enforcement actions to ensure compliance with tax laws and revenue collection.
It’s important to understand that the IRS will issue notices before taking enforcement action. If you receive a notice of intent to levy, it’s crucial to respond promptly to avoid further penalties and actions. Taxpayers can appeal IRS decisions and seek tax relief options, such as an installment agreement or an offer in compromise, to resolve their tax liabilities.
Dealing with IRS Levies and Garnishments
If you’re facing an IRS levy or garnishment, taking immediate action is essential. Contacting the IRS to discuss your situation and explore tax relief options can help prevent further enforcement actions. You may be able to negotiate a payment plan or request a temporary delay in collection actions. Seeking professional assistance from a tax expert or attorney can also guide you in navigating the process and protecting your rights as a taxpayer.
In some cases, you may be eligible for penalty abatement, which can reduce the total amount owed. If you believe the levy or garnishment was issued in error, you can file an appeal with the IRS to contest the action.
Dealing with an IRS levy on wages can be a stressful and challenging experience. Understanding your rights and options is crucial in navigating the process and finding a resolution. By taking proactive steps and seeking professional assistance, you can work towards resolving your tax issues and preventing future IRS enforcement actions.
For more information on dealing with IRS levies and garnishments and exploring tax relief options, visit the official IRS website or consult a qualified tax professional.