There’s never a good time to have a IRS tax garnishment that results in the IRS garnishish your paycheck.
I’m IRS lawyer Darrin Mish and I’ve been representing clients before the IRS since 1999. An IRS wage garnishment is also called a wage levy. A wage levy is different than a bank levy in that it is continuous meaning that it stays in place until it is released or the liability is paid in full.
When you get notice that you have a wage levy imposed against you, the first thing you need to do is to get a copy from your employer. It’s called a Form 668-W and it’s a multipage form. On the first page toward the bottom there is a place for you to list your dependents and your filing status. Make sure you list your filing status and your dependents on the form and get it back to your employer right away. It may take more than one pay period to get the IRS garnishment lifted and the more (legitimate) dependents you list on the form, the more income you will actually get in your next paycheck.
The IRS must have issued a Final Notice of Intent to Levy and sent it to the taxpayer via Certified Mail at least 30 days prior to the wage levy. This almost always happens and I rarely see the IRS break the law by seizing wages without sending the Final Notice of Intent to Levy.
So what do you do to get it released? This is one of the trickiest and most difficult situations for any IRS Problem Resolution attorney to deal with. You have almost no leverage; there’s no time for planning; we are simply left in a situation where we may have to agree to a bad deal just to get your wages (and your cash flow) moving again.
Typically the taxpayer or his or her rep will call the phone number on the wage levy notice. Once we are on the phone, the IRS employee will want to go through the monthly income and the monthly allowable expenses to come up with the monthly disposable income. They will want the taxpayer to pay their monthly disposable income on a monthly basis before they agree to release the wage levy. This doesn’t sound so bad until you realize that the monthly disposable income amount is greater than your true ability to pay. Sometimes you just have to agree and pay that amount until you can’t pay it anymore. In the meantime, it’s a good idea to have some other collection alternative in mind (like an Offer in Compromise) ready to send in once you can’t pay the ridiculous amount that they demanded you pay in order to release the wage levy.
If you can demonstrate to the IRS that you have no monthly disposable income, you may be able to convince them to put your account into hardship or currently not collectible status. This is probably the best way to get a wage levy released but it obviously depends on your financial circumstances.
Lastly, a very useful tool in getting an IRS tax garnishment released is bankruptcy. If the timing is right and all circumstances line up, bankruptcy can be a terrific solution to solving IRS problems including wage levies. Bankruptcy law says that the IRS Wage Levy must be released when a bankruptcy petition is filed.
Wage levies are brutal. It’s a terrible thing to happen. If you can avoid it by being proactive that’s much better than to wait until a IRS tax garnishment wage levy is filed against you and you have minimal resources to help solve your IRS Problem. If you have questions about IRS Wage Levies or really anything pertaining to IRS Problems, please call us to schedule a free consultation at (888) 438-6474.