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What is a Wage Levy/Wage Garnishment??
By Larry Weinstein, CPA | December 19, 2007
If the IRS levies or garnished your wages, the levy is served on your employer.
Your employer will be required to pay over a large portion of your paycheck to the IRS until your tax debt is settled or the levy is released.
The IRS does not take all of your paycheck; they allow you to be paid the standard deduction amount plus the personal exemption amount based upon your filing status and number of dependents.
For example, if your filing status is single with one dependent (yourself), you would be allowed to keep $8,450 for the year. This equates to $162.50 per week or $704.16 per month. The amount that you earn, above and beyond these amounts, must be paid over by your employer to the IRS.
If you don’t earn over the amount the IRS will allow you to keep, then there will be no levy.
The levy on your wages will only end (a) the levy is released by the IRS (b) your tax debts are paid off or (c) the statute of limitation prevents the collection of tax
You can appeal against the action of the IRS after the levy under the Collection Appeals Program. The IRS normally suspends collection action during the appeal. If your appeal is successful, the levy will be released.
You can negotiate the release of the levy with your local IRS revenue officer. You must provide the officer what they are requesting and establish a plan to resolve your outstanding tax liability. Mere promise to pay off your liability will not be sufficient.
IRS wage levies are one of the most onerous and intrusive actions that the IRS can take in the collection process. It is the most disruptive to your life or business and calls for quick action to get them released.
Topics: Wage Levy/Wage Garnishment |