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6 Things You Need to Know If Your Wages Are Being Garnished!

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6 Things You Need to Know If Your Wages Are Being Garnished!

6 Things You Need to Know If Your Wages Are Being Garnished!

If you fail to deal with your IRS debt long enough, after a series of notices, the IRS will eventually garnish your wages.  It is very important for you to be aware of your rights and to know your options if the IRS garnishes your wages.

It is a popular misconception that the IRS can only seize assets such as financial accounts, real estate, automobile, etc.  The IRS has the authority to garnish money from your paychecks until your debt has been paid in full, or an alternative payment arrangement is made.

Here are some recommended steps to follow if the IRS is garnishing your wages:

  1. Make sure the IRS has followed all procedures before garnishing your wages.  The IRS has to follow specific procedures before a wage garnishment is valid.  If the IRS has failed to follow these procedures, you can force them to vacate the garnishment.  Please understand this is a temporary solution because the IRS will make sure they get it right the second time.
  2. Make sure you are in compliance. With the exception of an extreme hardship, the IRS cannot remove a levy if there are outstanding tax returns. You need to be 100 percent sure that all of your returns have been filed.  Not doing so will also limit other resolution options.  The difficulty with filing back returns is obtaining the documentation for the income, deductions and credits.  Transcripts can be obtained from the IRS on the phone by calling 800-829-1040.  A word of caution, if the IRS agent starts asking you a bunch of collection questions, you might want to excuse yourself and seek professional representation.  Anything said to an IRS agent is notated in your file and can be used against you in future inquiries.
  3. List the correct filing status and number of exemptions.  When the IRS sends the Form 668(w)(c) to your employer, your employer is supposed to provide you with a copy.  This copy serves two purposes; 1) It provides notice of the garnishment, and 2) It allows you to list your current filing status and number of exemptions.  Your employer will use this information to reference an IRS table which will determine how much of your paycheck you may retain.  I cannot tell you how many new clients over the years we have received who cannot not pay their monthly bills because the IRS is garnishing in excess of the allowed amount.  NOTE:  The completion of this form is your responsibility!
  4. Know how your balance was determined. If you are being garnished, this means that either you have outstanding balances on returns that you have filed or balances from Substitute For Returns( SFRs).  Substitute For Returns are returns that the IRS filed on your behalf because you failed to file.  These are not in your best interest and the balances due are typically highly inflated.  Understand that you have a right to replace these SFRs by filing a return in protest.  There is a specific procedure for accomplishing this and you may want to seek professional representation.
  5. Know your outstanding balance. It is in your best interest to know your balances due because the balance due will somewhat determine your available resolution options.  I need to provide the same caution as in items one above, if the IRS is only interested in asking collection questions, excuse yourself and seek professional representation.  The IRS will use this information to increase its collection efforts.  Professional representations, such as our Certified Tax Resolution Specialists, know how to head off the IRS asset gathering inquiry. 
  6. Know your resolution options. Taxpayers who are being garnished often grasp for the easiest resolution option.  Besides an Installment Agreement, there are other options, such as; an Offer In Compromise, Innocent or Injured Spouse and even Bankruptcy based upon specific qualifications.  The important thing is to know ALL your options and which is the best based on your financial situation. 

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