Hot topics for both consumers and webmarketers on WebmasterRadio.FM
Every Wednesday, 5PM Eastern.
Wage Garnishment Tips
Wage Garnishment Defined
A garnishment is defined as a procedure whereby a creditor seizes your property through a third party. The term garnishment and attachment are used interchangeably throughout IRS terminology. (They mean the same thing).
If you are involved in a wage garnishment situation, the IRS would be your creditor while your property would be your wages. Wages are what you earn as an employee. They are reported on the Form W-2, which you use to prepare your income tax return.
The IRS can garnish your wages to fulfill an unpaid tax bill and leave you with just enough to meet your living expenses.
Save Tip
Comments
Tip Rating
Sample Wage Garnishment Cases
DebtHelp.com Tip: Here is an actual case involving IRS garnishments, taken from the IRS public records.
On February 9, 2005, in Sacramento, CA, Masako Lesh was sentenced to 18 months in prison and ordered to pay a $5,000 fine. Lesh pleaded guilty to bankruptcy fraud and money laundering charges on December 1, 2004. According to court documents, in 1998 Lesh and co-defendant, Mark Burelle, started EliteCom, an electronic components supply business, that acted as a broker for electronic components. On August 26, 1999, Lesh's previous employer, Channel Tek International Corporation (Channel Tek) obtained a judgment in which Lesh was ordered to pay Channel Tek damages in the amount of $164,970. As part of her plea agreement, Lesh admitted that beginning March 7, 2000, and continuing through November 2004, she devised and participated in a scheme and artifice to defraud Channel Tek out of its judgment.
On March 7, 2000, Lesh filed a voluntary Chapter 7 bankruptcy protection in which she fraudulently failed to disclosure her interest in EliteCom as an asset, even though it was a very profitable business. In addition, in response to a wage garnishment order obtained by Channel Tek in May 2001, Lesh submitted an "Employer's Return" to the Levying Officer which fraudulently stated that she was no longer employed by EliteCom. However, notwithstanding what she represented on the "Employer's Return," Lesh admitted that from May 2001 through 2004, she used assumed names to continue to work for, and earn significant compensation from EliteCom. Finally, Lesh admitted that she made multiple false and fraudulent representations and claims concerning her bankruptcy proceeding in a deposition in October 2001.
On a smaller scale:
Jane Doe owed the IRS $3,000 in back taxes. After numerous unsuccessful attempts to contact her to resolve this matter, the IRS finally implemented a wage garnishment against Jane. Each pay period, Jane’s employer was to deduct $500 from Jane’s check and submit it to the IRS. This amount would be used to pay off her unpaid tax bill. This wage garnishment process continued for six pay periods until all of Jane’s back taxes were paid in full.
Save Tip
Comments
Tip Rating
Non-wage Earners & Wage Garnishment
If you are a self-employed individual, or someone not working as an employee, the IRS can still garnish your income. The IRS will go after your vendors, financial institutions where your investments are, and any other party responsible for paying you money. These third parties, in turn, will pay the IRS instead of you until your unpaid tax bill is paid in full.
Save Tip
Comments
Tip Rating
Wage Garnishment Warning
DebtHelp.com Tip: An IRS wage garnishment is also known as an attachment, a form of a enforced collection. The garnishment is the last step involved in the IRS collection process. Your wages will be attached (garnished) only when you have refused to contact the IRS regarding your unpaid tax bill. Remember that. This entire process could have been avoided if only you placed a simple phone call, or wrote them. Ignoring an IRS Notice is your road to failure.
An IRS wage garnishment will occur within days of you receiving the IRS Notice of Intent to Levy. You will know it is going to happen. It is just a matter of time as to when it will occur.
Save Tip
Comments
Tip Rating
Why Do I Have A Wage Garnishment?
In order to arrive at the point where the IRS has attached to (ordered a wage garnishment) against your wages, you had to have:
Ignored communication with the IRS
Not filed some previous tax returns
Have an overdue tax bill
Anyway you look at it, the IRS has exhausted its attempts at communicating with you regarding your back taxes. A wage garnishment, levy, is the last step in the enforced collection process and is meant to grab your attention.
Save Tip
Comments
Tip Rating
Stop IRS Wage Garnishment
DebtHelp.com Tip: How do you stop an IRS wage garnishment? As in an IRS attachment situation, you have just a couple of options.
First, keep in contact with the IRS. It has been mentioned in this tips book many times, but this is important. The IRS simply wants to know what is going on with you and truly wants to work with you. Do not ignore them.
Second, arrange repayment of unpaid taxes. Enter in a tax resolution method that is most appropriate for you. Installment agreements, penalty abatements, offer in compromise – all are there to help you repay your tax debt.
Third, keep current with your payment arrangements. If you fall behind in any of them, the IRS may cancel the agreement and move forward in its collection efforts.
Fourth, do not take it out on your employer. They are simply following instructions. It is your fault you are in this situation, not theirs.
Fifth, live on less. Learn to live on less as your wages are taken away from you to pay your back taxes.
Sixth, you can request a release from your wage garnishment.
The best way to stop an IRS wage garnishment, is to communicate willingly with the IRS. Too many taxpayers believe that by ignoring the IRS, they will go away. That is not true. The IRS can be the most persistent and annoying creditor you will ever have. They have a knack of popping up years later, when you thought it was safe.
Save Tip
Comments
Tip Rating
Your Responsibility
A wage garnishment is the second most common enforced collection method used by the IRS to collect back taxes. The IRS receives their back taxes by attaching their tax bill to your paycheck. Each pay period, your check is reduced by a certain amount.
You will receive notice of the applicable wage garnishment per pay period. It is your responsibility to keep track of how much is deducted from your paycheck, and the total amount of taxes turned over to the IRS. Keep this for your records.
Once you have calculated that the entire amount due has been collected (‘paid in full’) from your paycheck, and submitted to the IRS, contact the IRS.
At this point, the IRS will release your wage garnishment.
Save Tip
Comments
Tip Rating
Releasing A Wage Garnishment
DebtHelp.com Tip: How do you get a wage garnishment released? Since a wage garnishment is a form of tax levy, the procedures you need to follow to have one released are essentially the same.
You paid the wage garnishment and all applicable costs in full.
You have shown the IRS that the levy is causing undue financial hardship on you.
You have shown the IRS that they have a better chance of collecting the taxes if they release the asset.
The statute of limitations ended before you received the levy notice.
You are involved in an installment agreement (unless it states otherwise)
You have shown the IRS that the liabilities on the levied property are less than the fair market value. And, releasing the levy would not hinder collecting the taxes.
A wage garnishment release will remove the unpaid tax bill from your IRS account. It also will stop the garnishment from decreasing your wages, thereby giving you a larger paycheck.
Save Tip
Comments
Tip Rating
Appealing A Wage Garnishment
If you dispute the wage garnishment, you will need to fill out and send the IRS Form 12153, Request for A Collection Due Process Hearing.
This must be done within 30 days after receiving notice of a tax levy being served against your wages. Your appeal will be filed with the IRS Office of Appeals. Here is a sampling of some of the issues you may discuss at the Collection Due Process Hearing:
Your tax bill was paid in full prior to you receiving the IRS levy notice.
The IRS made a procedural error regarding your assessment.
You would like to discuss the collection options you have
The tax and levy notice were both assessed while you were in bankruptcy. (You are protected by the automatic stay while you are in bankruptcy).
The statute of limitations has expired. This means you received your IRS levy notice after the time allowed had expired.
You want to make a defense based on your marital status.
You did not have enough time (nor the opportunity) to dispute the assessed liability.
You need to mail the form requesting a collection due process hearing to the IRS address that is printed on your levy notice.
An IRS garnishment is another term for levy. You have the same taxpayer rights as if dealing with other tax levies. Anytime, in fact, that you deal with the IRS regarding any tax matter, you are protected by the Taxpayer Bill of Rights.
