When you have other bills to pay, IRS wage garnishment can result in a significant reduction in your monthly salary. This can be painful for tax payers who carry tax debt and haven’t been able to pay back what they owe to the IRS.
Can the IRS Garnish Wages Without Notice?
The Internal Revenue Service uses wage garnishment to catch your attention and encourage you to pay your back taxes. In order to satisfy the outstanding penalties, they will deduct a fixed amount from your monthly salary.
Wage garnishment does not take place right away. The IRS will first issue you notices of past due taxes, giving you 10 to 30 days to pay them depending on the type of tax and the amount owed.
You have 30 days to act after receiving a final notice of intent to levy. If you do not notify the IRS or request a hearing by that date, the IRS will contact your employer and proceed with the wage garnishment or wage levy. The garnishment will continue until you pay all of your taxes outstanding, enter into an arrangement with the IRS, or the Collection Statute Expiration Date for tax years with an obligation arrives.
When it comes to wage levies, paying the taxes owed is the most significant technique for avoiding the charge. When the IRS issues you a Notice and Demand for Payment, pay it as soon as possible.
Have you been notified by the IRS that they intend to garnish wages? Wage garnishment by the IRS is embarrassing, but it is also avoidable. This is a situation that neither the employee nor the employer wants to be in. The process is also complicated for the employer to set up.
What is the procedure for IRS wage garnishment?
Any cash from an employee’s paycheck must be sent within one full pay period by the business. After the employer receives Form 668-W, Notice of Levy on Wages, Salary, and Other Income from the IRS, the complete pay period will begin. The employee can still contact the IRS to negotiate the levy being lifted and resolving their tax debt at this time. This is a simplification but these steps give you an idea of how your pay can be affected if you owe money to the IRS.
If the IRS levies (seizes) your salary, a portion of each pay period will be sent to the IRS until:
- You establish other plans to pay your past-due taxes.
- The amount of past-due taxes owed to you has been paid, or
- The levy has been lifted.
A portion of your wages may be excluded from the amount that gets withheld, and you will be paid the difference. The amount that is exempt is calculated using the standard deduction and an “amount determined.” This sum is decided in part by the number of dependents you are permitted during the year the wages are levied.
With the levy, the IRS sends your employer Publication 1494 PDF, which describes how to calculate the amount exempt from levy. Within three days, your employer will give you a Statement of Dependents and Filing Status to complete and return. If you don’t return the statement within three days, your exempt amount is calculated as if you’re married and have no dependents (zero).
If you have other sources of income, the IRS may apply the exemptions to other sources and levy on 100 percent of the income from a single employer.
Release of Levy and Garnishment
Unlike a bank levy, wage garnishment is ongoing and not a one-time event. When an employer receives a Notice of Levy, they are legally obligated to pay over the non-exempt amounts in the taxpayer’s paychecks until the tax debt is paid in full or the IRS releases the levy.
The good news is that the IRS is more forgiving in removing the garnishment because the ongoing nature of a wage garnishment and the resulting loss of income may be devastating to the tax payer.
When properly addressed, the IRS will lift the garnishment to the degree necessary to relieve any financial hardship. They will also lift the garnishment if the taxpayer enters into an installment arrangement to pay off the debt, regardless of whether the garnishment is creating financial hardship.