| 7 Things You Must Know Before Solving Your IRS Wage Levy Thanks for requesting my Free Report Getting a Wage Levy or Wage Garnishment can be an unpleasant experience, to say the least. If your employer, has received a notice of wage levy from the IRS, they are obligated by law to comply with the wage levy and turn over most of your paycheck to the IRS. Most employers will comply with the IRS request because they do not wish to have the IRS come back after them for funds they were supposed to withhold and remit to the IRS. But it doesn't have to be this way. You can get the IRS to release the levy, but you must move quickly. By the way, if you don't get the levy released, it will attach to your paycheck until one of four things happens. ( I call this the gift that keeps on giving) 1) You pay the IRS in full, in cash what they think you owe them. If the IRS is paid in full, what they say the balance due is, they are obligated to release the levy immediately. They can’t levy you when you no longer owe them money. Unfortunately for many taxpayers this is simply not possible. If this were a viable option for many, they wouldn’t find themselves in the position of having a wage garnishment in the first place. 2) The IRS has collected the full amount through the levy or levies, that they think you owe. The IRS must release the levy, if your account balance is paid off through a levy, similar to paying it in full in cash. If you no longer owe the money, they have no reason and no right to levy. The problem with this is simply that the balance the IRS says you owe may be quite large, and it would take many weeks or months of wage garnishments for the balance to be satisfied. In the meantime, for many taxpayers, this makes it tough to pay their normal living expenses such as food and rent. 3) The IRS must release the levy, if the collection statute expires. Unfortunately, this can be as long as 10 years from now, and is unlikely to happen before your next paycheck is due to be paid, or 4) The IRS issues a “Release of Levy”, informing your employer that is OK to release the levy and and leave your paycheck alone. A “Release of Levy” will not be granted simply by providing a promise to pay. You must have a plan in place that is acceptable to the IRS, before the levy can be released. Now on to the Steps to Solving Your IRS Problem 1)Contact the payroll department of your employer and find out when the next scheduled payroll is. Have them tell you when the cut-off for the next payroll is. This may be several days to a week in advance of the payroll. This date is going to determine when you need to have the levy release in their hands, so that they will NOT garnish your wages. Additionally, obtain the fax number of the person in payroll that you will be working with to release the levy. After a levy release is obtained from the IRS, they will mail it to your employer. Unfortunately, this may take a day or two for the IRS to do. And then, you are at the mercy of the US Postal Service to deliver it. This adds too much time to a situation when time is of the utmost importance. 2)You must identify exactly what tax years are involved. The tax year or years that actually caused the wage levy should be noted directly on the wage levy itself. The problem is, there may be other tax years, which were not included as a part of the levy, that have problems. All tax years must be identified before you begin. These problems may present themselves as having years in which there are unfiled tax returns or years in which there are balances due. The reason for this is simple. If you are going to solve your tax problem, ALL of the strategies available to you, require you to have filed, up to the present tax year, your tax returns. If you have tax returns that have not been filed, they must be filed. Even if you don’t have the money to pay the tax due on these returns. 3) You must find out how much the IRS says that you owe. Once again, you can find out how much the IRS says that you owe right from a copy of the wage levy. But this amount is only the amount which is part of the wage levy. There may be other years with problems involved. You must contact the IRS and find out how much they say you owe for ALL of the years. Once again, the problems for ALL of they years are going to have to be solved to have the levy released. 4) Are you dealing with ACS (Automated Collection Service) or with a Revenue Officer? If the levy came from ACS, then you are dealing with ACS and must work to get the levy released through ACS. When you call up ACS, you will be dealing with whoever happens to answer the phone, in whatever office they happen to be in. If the levy has an IRS employee’s name on it, then your case has been assigned to a Revenue Officer. This Revenue Officer is now personally working on your case, and you are going to have to work directly with this Revenue Officer to solve your wage levy problem. 5) Next you must evaluate the options available to you to best solve your wage levy. Consideration must be given to the amount of tax due, and the tax periods that are due that we determined in steps 2) and 3) above. The options available to you to solve your tax problem are: Payment in full. If you pay the balance due in full, the IRS is required to release the levy filed on your paycheck. Installment Agreement-This is a payment plan that allows you to pay your debt off over time to the IRS. You must be current in all of your filings, and remain current while the Installment Agreement is in effect. Offer in Compromise-This is a program that may allow you to settle with the IRS for an amount, for less than you owe. A detailed analysis must be performed that evaluates your ability to pay based upon your current monthly income, your monthly IRS ALLOWABLE expenses, and your equity in assets, such as home, investments, retirement assets etc. Bankruptcy-In some instances, bankruptcy may be a viable alternative. The rules can get rather confusing, but taxpayer’s should know that under certain cirumstances, it may be possible that they can get relief under the bankruptcy law. • The tax return was filed more than two years before the bankruptcy filing; • The tax return was due more than three years before the bankruptcy filing; • The tax liability was assessed more than 240 days before the bankruptcy filing; • The taxpayer did not file a fraudulent tax return or engage in tax fraud; and • A tax return was actually filed for the delinquent tax liability. Hardship Status/Currently Not Collectible- This option is known as hardship status, or in IRS jargon as currently not collectible or 53 status. The way that hardship status works, is the IRS will analyze your income situation, similar to an offer in compromise. They look at your monthly income versus what your IRS allowable expenses are to see if you have any ability to pay. If you have no ability to pay, based upon you situation, they will flag your account as currently-not-collectible or code 53, which is the official term. This means is that you currently have no ability to pay. Accordingly, they will stop collection activity at this time, as it would create an undue hardship on the taxpayer to try and collect their taxes. This does not make the tax debt go away, it simply halts collection activity for the time being. The IRS will re-evaluate your account at some time in the future to see if your situation has changed so that they can collect the tax debt. Statute of Limitations- The IRS doesn’t have forever to collect the tax debt. They only have 10 years, from the date the tax was assessed to collect it. So if your tax debt goes out to 10 years and it hasn’t been paid, by law the IRS must write off the debt and cease collections. For some taxpayers, this can be a good option. 6) Implement the appropriate strategy, based upon your unique tax situation. The best strategy for you is the one that is available to you, at the least possible cost. Not all strategies are available to every taxpayer. For example, your income may be too high or you own too many assets, to qualify for an offer-in-compromise. Maybe you have unfiled tax returns which would disqualify you for bankruptcy relief. So selecting the best option for you must be done and done quickly. 7) After you implement the appropriate strategy with the IRS, you must obtain a levy release and have this sent or preferably, faxed directly to your employer. Obtaining the levy release is the end result of the process. Once your employer receives the “Levy Release” from the IRS, they will no longer garnish your wages. Receiving a Wage Levy on your paycheck is no fun. To obtain a Release of Levy from the IRS can be done, but it calls for quick action. If you do nothing, your employer will continue to garnish your wages, until the IRS tells them that they can stop. This generally occurs when the tax due has been paid over a period of time through a wage levy. If you need professional assistance to solve your Wage Levy Problem, simply call us at (713) 726-1603, or respond to Larry@SolveMyTaxProblems.com for a no-cost, introductory consultation. |