IRS Tax Garnishment: What to Do

Facing an IRS garnishment is one of the most horrifying experiences in a person's life. When the Internal Revenue Service garnishes your income, you are forced into financial distress because they will take the majority of your earnings straight from your employer and also will seize your assets. This article will lay out the steps you need to take, at this time, to have your life back when confronted with an IRS tax garnishment.

What kind of garnishment?
If it is a bank garnishment, the IRS will freeze your bank accounts and take all money in the account equal to the total amount you owe. Initially the bank will hold the levied funds for 20 days before releasing it to the IRS, so you need to take action inside this time to have your money back.

If it is a wage garnishment, it is never too late to get the garnishment released, even if it has been on for years. Since the IRS will garnish significant portion of your income (and they won’t care about whether you have enough money to pay your monthly expenses), try to make use of all options available to get it removed as quickly as possible.

How you can get the garnishment released?
In order to get it back, you will need to contact the IRS staff who issued the garnishment to get all necessary information from them. Call up the IRS toll free number if your case is with the Automated Collection System. Anyone who answers can help you.

If your case is with a revenue officer, you will need to contact them in order to get your levy released.

 
What do you have to say?
The fact is, there is nothing much to speak about. Garnishments are serious business and are best left to tax attorneys experienced in negotiations. The IRS will do whatever they can to make you to pay an amount greater than what you can afford to pay. Remember, the IRS works for the government and not for you.  So do not think that they'll help you in some way. They least worry about your financial situation but will try to make you pay out as much as possible. You won’t be left much to pay your other expenditures and to support your family.

At times, a person might unable to hire a tax lawyer immediately who primarily specializes in IRS garnishments. So below are a few quick tips to help you. Do not ever agree for an unaffordable payment plan even if the IRS uses pressure tactics in forcing you. You have the right to ask for a taxpayer advocate. You might get a release of your tax levy but remember it is temporary only. What this means is, you'll need what is known as a 'collection alternative' with the IRS so that you can resolve your case. Typical collection alternative include payments plans, hardship status requests, offers in compromise, and Chapter7 bankruptcy.

It is really essential that during this respite from the IRS tax garnishment, that you really work towards a long-term plan to take care of your tax debt. In case you fail to do so, the IRS will issue another garnishment and you will have really a hard time getting it released.

How It Is Possible for the IRS to Garnish Your Wages So Easily?

It’s a great feeling always when your payday is near and you are ecstatic to get your paycheck. But then, you see the check… and you’re in complete shock. You notice a major portion of your salary is missing! You run to the payroll department to learn what happened. You have been told that the IRS has garnished your salary and further, they inform that you will be left just a few hundred dollars for your expenses. I hear you ask yourself, how can they do this to me all of a sudden? The truth is, the Internal Revenue Service can easily garnish your wages and this article will explain the entire process that the IRS carries out during a wage garnishment. 

Before the IRS starts to take a major portion of one’s salary, they will send number of notices to the taxpayer which pre-warns them about their pending tax dues. You'll find different notices for each and every kind of tax issues. Say for example, you'll get one type of notice for failed tax return filing and another type for non-settlement of your tax payments. If it's an individual tax debt, form 1040 is used and business collection notices are related to an Employee Identification Number (EIN).

For those who do not meet their tax obligations or fail to reply to notices on time, a federal tax lien arises against the taxpayer under Internal Revenue Code 6321. The lien attaches to all the property and also property rights a taxpayer hold. One should note that this lien is not an IRS levy or garnishment. A lien isn't the actual seizure; instead, the lien provides the IRS the legal right to levy property.

Have you received a CP 504 Notice from the IRS? The letter will be cited as “Intent to Levy" and it gives a stern warning to taxpayers with pending dues. The Internal Revenue Service will wait for thirty days from the date of release of the letter and from then on, they have authority to levy your state tax refunds. This notice comes in certified postal mail.

With just the issuance of CP504 notice, the IRS cannot take collection action like wage garnishment. However if you get the Final Notice of Intent to Levy or CP90, it requires immediate attention from you because it is a very serious notice. Don't forget this is actually the last notice you will get and you'll be provided 30 days to respond to it. After that, the IRS is free to levy your wages and bank accounts. 

The IRS keeps a record of all your income details under Wage and Income transcript. It includes your savings account particulars, any 1099s from the prior year, interest income and also W-2s. With all this information, the IRS can easily send notices to all bank accounts, and to all your past and present employers to carry out levy on your income.

So the IRS not only takes money from your salary and bank accounts but additionally their actions affects your social standing too since that every levy they carry-out will be documented in county court house and this details can reach the general public easily. 

It is important to act right away if you get a levy before things get worse. Don't be fearful. Regardless of how big the tax problems you've got, it can be definitely resolved. Act quickly enough and there is a great chance we can get that IRS levy or wage garnishment released.

What You Need To Do When the IRS Garnishes Your Bank Account

If you think that the money in the bank account is going to be safe from the IRS, then you are completely wrong. It is a nightmare situation – You’re at the ATM. To your great shock, you aren't able to withdraw the cash. Your balance shows negative. You rush to the bank only to find that your account is under IRS bank levy and you receive a copy of levy notice letter from them. You are totally shattered.

Do not think that you cannot come out of this levy. As a tax attorney, I can assure that for each and every tax problem, there is a solution. In-fact, there's no such thing as a hopeless tax case. The next few paragraphs will tell you how.

1. The Internal Revenue Service has enforced a levy but the cash in your account will not go immediately to the government.  The bank will freeze your money for a three week period from the date of levy after which only it will be transferred to the IRS. So within this time period, you need to do the negotiations with the IRS and request for the money to be returned to your bank-account. This is called as levy release.

2. The IRS could possibly ask various details such as your previous tax returns, the amount withheld from your salary for income tax and also your estimated tax payments. There are exceptions to the regular practices, so the IRS employee is not the last word.

3. You will need to complete a form which IRS uses to capture your financial situation. This form is referred to as Collection Information Statement and from this the IRS will know exactly how to garnish you in the future, including other bank accounts and the wages. So utmost care has to be taken about the information you are going to provide to the IRS.

4. In case your application is denied, you have the right to appeal against IRS enforcement actions. There are two main appeal processes- Collection Appeals Program or CAP and Collection Due Process. Most IRS actions related to tax collection can be appealed with the CAP process. Not only that, Collection Appeals Program provides taxpayer a higher success rate  when compared to other programs like Audit Appeals, Offer in Compromise and Collection Due Process. You know what, IRS publishes a rule book called Internal Revenue Manual (IRM) to guide their agents and it gets regularly updated by the federal government. But IRS employees has a hard time with this book since it is very complicated and many times, they miss to follow the rules exactly right during the tax collection process.  Here we use this effectively to win the CAP appeal by pinpointing the mistakes and the rules that was not followed by the IRS agents to the appeals officer.  When it is shown with supported documents, the appeal officer will reverse the IRS levy enforcement and your garnishment gets released.

5. You got a garnishment relief. However it doesn’t mean you can relax yourself forever since a levy release is often temporary. It is just a start of your representation. It's best to immediately begin work towards getting a permanent solution. Every cloud has a silver lining so it's time for you to analyze the choices available. To stop the bank levy permanently, settle your tax debts as soon as possible or take the alternate steps that is available to you. Otherwise, don' get surprised to see many more IRS garnishments on your hard earned money.