How to Negotiate an IRS Wage Garnishment
Most creditors can only garnish 25% of your disposable income, but these rules don’t apply to the IRS. The law only requires the agency to leave you enough money for basic living expenses, and it can take everything above that threshold. Here are three steps you can take to ensure that you pay the lowest amount possible.
File the Statement of Dependents
Contact the IRS About Court-Ordered Child Support
Claim Hardship Status
How Can You Stop an IRS Wage Garnishment
The most effective way to get a wage garnishment released is to pay the tax debt in full. Most people who are having their wages garnished, however, can’t do that; if they could, they wouldn’t be in this situation. There are, luckily, a few other options that can stop a wage garnishment.
1. Set Up an Installment Agreement
An installment agreement is when the IRS lets you make monthly payments on your tax debt. Setting up an installment agreement does not guarantee the agency will release the garnishment. It’s more likely to do so, though, if it believes you’re serious about paying off your tax debt.
2. Apply for an Offer in Compromise
An offer in compromise is when the IRS agrees to accept less than the balance owed on your account, and the agency effectively erases any remaining debt you have. The IRS garnishment generally continues while your offer is pending, but in some cases, the agency may agree to stop the garnishment once you submit your application.
3. Get Your Account Labeled as Currently-Not-Collectible
Currently-not-collectible (CNC) is a status that the IRS assigns to uncollectible accounts. You must prove to the agency that you don’t have enough income or assets to pay your tax debt. CNC status, however, is not a permanent situation. You will have to repay the debt once your financial situation improves.
4. File Bankruptcy
Bankruptcy can temporarily pause an IRS wage garnishment — the courts issue a stay to all creditors, including the IRS, when you file. A stay is basically an order to stop all collection activities, but it does not eliminate your tax debt. Bankruptcy can only eliminate tax debts that are more than three years old and were assessed more than 240 days ago, and only if you’re compliant with all your current filing obligations.
Setting up any of these arrangements on your own can be complicated, and if you’re in the midst of a garnishment, you need to be especially careful. You don’t want to agree to a payment plan, for example, and then realize the wage garnishment is still in place. A tax debt specialist can help you deal with the IRS successfully.
Mistakes to Avoid With Wage Garnishments
The IRS has the legal right to take all your pay except what you need for the bare essentials, and as you can see from the numbers above, you may not have enough money to cover your bills once a garnishment starts. Here are some mistakes to avoid if you’re worried about a wage garnishment.
The IRS sends multiple notices before garnishing wages. Respond to these notices before a garnishment starts.
Appeal the garnishment if you believe there’s an error. You typically need to start the appeal when you receive the notice of intent to levy your wages, not after the garnishment starts.
Statement of Dependents
Make sure to file this form. Every dollar helps when you’re dealing with a wage garnishment.
Dealing With the IRS on Your Own
The IRS has a complicated maze of rules and procedures, and you should always work with a professional.
The IRS wants reassurance that you’ll pay your tax debt, and the agency generally only garnishes wages as a last-stop measure. Be as proactive as possible if you have tax debt. Reaching out to the IRS first is always better than waiting for the agency to find you.
Contact Silver Tax Group to Negotiate a Wage Garnishment
An IRS wage garnishment can be a panic-inducing development, and it’s understandable if you’re unsure how to react. Silver Tax Group specializes in helping our clients deal with tax debt and prevail in IRS interactions such as negotiating a wage garnishment.