When a taxpayer owes money to the IRS, the IRS can collect the unpaid taxes, penalties, and interest in several ways, including wage garnishments, tax liens, levies. Here is a breakdown of the most common IRS collection methods.
Common IRS Collection Methods
Wage Garnishment
Owing the IRS can be a frightening thought. If you are not paying your taxes on time and ignoring their warnings, they may take one of their more aggressive tax collection methods – wage levy or wage garnishment. This is a legal way for the IRS to collect debts from you without you paying them directly. Your employer will be contacted and, by law, must take a portion of your paycheck and send it to the IRS. Employers must inform the employee once a wage garnishment is issued and state the amount they will withhold from each paycheck.
The Different Types of Wage Garnishment
Child Support
Above all other debts, wages must first satisfy child support requirements. The law requires automatic wage withholding for family support orders, alimony, and spousal support.
Federal Student Loans
Next in garnishment priority is federal student loans. The government can garnish up to 15% of a student’s wages if they default on a federal student loan.
State Income Taxes
Once the federal debt is collected, state tax agencies are eligible to collect an unpaid debt. Taxpayers who fail to pay state taxes can face garnishments up to 15% of wages until the debt is paid in full.
Credit Cards and Other Debts
After federal and state tax levies are paid, private organizations can garnish wages from their borrowers. In addition to credit card debt, these liabilities may include medical bills, personal loans, or other unpaid consumer obligations.
Liens
A federal tax lien is another aggressive action the IRS will take to collect the money you owe without paying the IRS directly. The tax lien will appear on the taxpayers credit report, making it nearly impossible to obtain a loan. Account levies allow the IRS to take money directly from financial accounts, including checking, savings, or retirement accounts.
Levies
Once a lien is imposed, the IRS will then issue levies to seize the taxpayer’s properties, vehicles, and bank accounts to satisfy the tax debt. The IRS also has the legal right to issue multiple levies against the taxpayer’s assets. The IRS will put the funds obtained from these assets toward the taxpayer’s tax debt, but penalties and interest will continue to accumulate.
How to Stop a Garnishment
There are several ways to reverse the judgement and stop a garnishment. The best course of action is seeking legal advice immediately after the garnishment has been imposed. You may object due to financial hardship or incorrect judgements. You may also try to set up an alternative payment plan with your lender in place of the garnishment.
Need Tax Help?
You have legal rights, including how much income they’re withholding and taking steps to lessen its hardship or burden. Wage garnishment and tax liens/levies should be taken seriously. With professional tax representation, you may be able to release the federal tax lien or other levies while negotiating a favorable tax settlement with the IRS. Depending on your situation, your tax professional will work to reverse these IRS actions so that you can address your tax debt problems.
Contact US Tax Shield today at (877) 829-3535 for your free, no-obligation consultation.
