When it comes to upholding and executing the US Tax Code, the Internal Revenue Service (IRS) has extremely broad powers. When you owe taxes, and you ignore or refuse to work with the IRS to satisfy your debts, they have the authority to employ some extreme measures in order to collect from you what is owed, including any interest and penalties that have accrued as a result of your unpaid tax debts.
Some of the harshest collection measures that the IRS can use outside of pursuing criminal charges against you are to levy your property and garnish your wages. Below we have provided a detailed Q&A session on IRS levies and wage garnishments. If you have any questions which we have not answered in this blog, please do not hesitate to contact our law firm today.
What is a levy?
A levy is any seizure of property conducted under some sort of authority in order to fulfill debts that are owed. It is a tactic often employed by government agencies as well as private creditors and lenders under certain circumstances. Generally speaking, an IRS levy will include the freezing of your financial accounts and the seizure of funds in order to satisfy your existing tax debt. For example, the IRS could levy your bank account, requiring the bank to freeze your funds and then release them to the IRS. They could also levy property such as real estate and then sell it at auction in order to satisfy your debt.
What is a wage garnishment?
A wage garnishment is a type of levy whereby the collecting authority will seize a portion of your employment wages every month in order to satisfy your debts. If the IRS elects to levy your wages, your employer will be required to turn over the requested portion of your paycheck each month directly to the IRS until the debt is satisfied and the levy is released.
When can the IRS utilize these tactics?
The IRS, despite common public perceptions, is generally quite willing to work with taxpayers to find reasonable solutions to satisfy tax debts. They do not usually jump to extreme measures like levies and wage garnishments right away. The IRS will always notify you in writing if you owe them money, and the notification must include an itemized list of your debts including unpaid taxes, penalties, and interest. They will give you a specific period of time in which to take steps to satisfy the debt. If you do not take any action by that deadline, then the IRS will begin to explore options for collections, including possibly levying your property and garnishing your wages. If they decide to pursue a wage garnishment or other levy, they must notify you of their intent at least 30 days prior to the levy and inform you of your right to a hearing.
Doesn’t the IRS have to get legal permission to do this?
Unlike private creditors, the IRS does not need to receive a court judgment in order to proceed with levying your personal assets and real property. As previously mentioned, the IRS has an enormous amount of authority to uphold the US tax code, allowing them to take such actions of their own volition without having to seek judicial approval.
Are there limits to how much the IRS can take?
When it comes to wage garnishment, private creditors are generally limited to seizing a maximum amount of your salary while the IRS is only limited by how much they are required to leave untouched. The IRS is legally required to leave you with enough money to pay for your basic living expenses like rent and food. The amount the IRS is required to leave depends on the number of exemptions you claim on your federal income taxes.
What if these tactics are creating an unlivable economic situation?
When an IRS levy—including wage garnishment—prevents you from fulfilling your basic necessities for living, it is considered to be causing an “immediate economic hardship.” If this is the case, you must reach out to the IRS and provide them with financial information that demonstrates that the levy has created an unreasonable hardship. In such cases, the IRS will release the levy and work with you to establish a payment plan in order to satisfy your tax debt.
What options are available for relief?
Many people will be surprised to learn that there are actually quite a few ways to stop an IRS levy or wage garnishment, either permanently or at least temporarily, while working to come up with an alternate payment plan.
When you consult with the experienced tax attorneys at the law office of Robert V. Boeshaar, we will help to determine which programs or appeal options are available based on your specific circumstances. Once we have gathered all the information, we can work with you to determine the proper course of action to help you get relief from an IRS bank levy or wage garnishment. Potentially remedies could include, but are not limited to, offers-in-compromise, payment plans, or even bankruptcy in some extreme cases. Contact Robert V. Boeshaar, Attorney at Law, today to schedule a consultation and discuss your options.
Robert V. Boeshaar Attorney at Law, LL.M.,PLLC
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