Posted by KLSM CPA Firm PLLC

A Threat From The IRS to Garnish My Wages: What to Do

A Threat From The IRS to Garnish My Wages: What to Do

For people with tax debts, it is possible that Uncle Sam will garnish some part of the wages in a process known as a continuous levy. This happens when someone does not respond to IRS’s request for a tax repayment. Uncle Sam will inform the employer, and a considerable part of the paycheck will automatically take care of the debt. 

The IRS could take up to 25% or more from the monthly paycheck, which translates to a severe financial burden. The good news is there are a series of options if you want to stop Uncle Sam from seizing your paycheck. 

This article will explore various options, and you can decide which option works best for you. 

  1. Pay the Debt off in a Single Lump Sum

Once you are aware of the threat of garnishing your wage, pay the entire debt off in a single lump sum. The IRS often considers a failure to respond as a go-ahead to start the wage garnishment process, yet there are times one might miss such communications. 

There are various means with which one can pay, like money order, over the phone, or with a credit or debit card. This is a recommended option if you have got the means as it is the fastest way of stopping wage garnishment. 

  1. Have a Repayment Plan setup

This involves an application for a payment plan to settle your tax debt. With such an installment agreement, you will pay off your entire tax dents in a bit of installment. There will be a monthly payment that will work with your finances. The amount can be fixed every month for six years. 

Examine the plan and commence the payment process over the phone or online. You will have to pay a user fee for setting up an installment agreement. A low-income earner might qualify for a fee waiver that takes care of the arrangement's user fee. 

  1. Settle the tax Debt for a Lesser Amount

This involves negotiating a payment plan that allows you to pay a lower amount than what you owe. 

All you have to do is log on to the IRS website and fill the( Offer in Compromise) OIC pre-qualifier to examine your eligibility to take care of your debt for a lesser amount. While qualification is usually challenging, it will significantly bring down your tax debt with a legal statement's backing. 

Filing all outstanding tax returns is compulsory and essential to qualify for this plan. Anyone granted the offer must be up to date on their tax for five consecutive years. One can also appeal a rejected OIC within 30 days. 

  1. Declare Hardship

Get in touch with Uncle Sam and let them know the wage garnishment will make life horrible for you. If the IRS listens to your case and concludes that you indeed cannot do without the income, they might consider stopping the garnishment.

However, this is not a license to avoid paying your taxes. When you declare hardship, it simply buys you some time since you qualify for the CNC (Currently Not Collectible) status. Bear in mind that as soon as your financial situation improves, Uncle Sam will recommence the collection action. 

If you have enough information about your financial situation, the process will be faster. 

  1. Declare bankruptcy 

Filing for bankruptcy is an excellent way to get some debt discharged, primarily your tax debts. Declaring bankruptcy can suspend IRS wage garnishment. This is because filing for bankruptcy can give you an automatic stay that stops all debt collection actions, including foreclosure, garnishment, and repossession.

It, however, comes with the option of denting one's credit score, which makes it essential to think the option through before considering it. It presents a clean break from all debts, including taxes as well.


FOR MORE INFORMATION OR TO SEE HOW KLSM CPA FIRM, PLLC. CAN HELP YOU WITH YOUR TAX FILING NEEDS, PLEASE CLICK THE BLUE TAB ON THIS PAGE.


THANKS FOR VISITING.

KLSM CPA Firm PLLC
Contact Member