Ways to Stop IRS Wage Garnishment

When you have tax debt, the IRS may garnish a portion of your wages in what is known as a “continuous levy.” If you do not reply to their request for repayment, the IRS will notify your employer, and a portion of your paycheck will be deducted immediately to pay off your tax debt. They can take a quarter or more of your monthly income, putting you in a difficult financial situation. Interestingly, there are numerous ways to stop IRS wage garnishment. 

Choose the best option from the following to stop IRS wage garnishment and reduce your financial burden.

Pay the Balance Due

People are sometimes too preoccupied with their lives to remember to pay the balance due on their return. Others may relocate, fail to notify the IRS of their new address, and remain unaware of the unpaid balance due on their taxes. On the contrary, some believe their spouse is responsible for the payment. 

No matter what the reason is, you can pay the balance owed. Here are a few of several options for paying the overdue balance that the IRS accepts: 

• Cash
• Cheque or money order (Payments should always be made payable to the “U.S. Treasury.”)
• Same-day wire transfers to the IRS from the U.S. or foreign financial institutions.
• Credit or debit card payments made through a third-party payment processor

Note: Depending on which payment processor is used, the fee ranges from 1.87 percent to 1.99 percent of the payment amount. In addition, the IRS restricts the number of credit card payments you may make. The type of tax payment determines the restriction.

• IRS Direct Pay allows you to make a direct debit from your checking or savings account to the IRS.
• Pay with the IRS2GO App: Taxpayers can use the IRS2GO app to make IRS Direct Pay payments and credit or debit card payments.

Enter into an Installment Agreement

Installment agreements are the most commonly used method when people cannot pay their tax debt in full. The IRS provides a range of installment agreements ranging from 36 months (three years) to 84 months (seven years).

Request an Offer in Compromise

An offer in compromise enables a taxpayer to settle an outstanding tax debt for a lower amount than what is owed. Unfortunately, the IRS approves only about 40% of Offers in Compromise applications. Filing an Offer in Compromise can be a time-consuming and difficult process. However, it can be life-changing for the right person.

Request Currently Not Collectible (CNC) Status

Inform the IRS that the wage garnishment is causing you financial hardship. If the IRS hears you and determines that you genuinely require the income they would deduct, they may suspend the wage levy. This does not, however, mean that you’ll never have to pay off your tax debt. 

On the other hand, declaring a hardship will only buy you more time because you are eligible for Currently Not Collectible status. Once your financial situation improves, the IRS will resume collection actions. The IRS may place a lien on your property but will not seize it if you own the home. 

Penalties and interest will continue to accrue on accounts that are currently not collectible. But, the statute of limitations on collecting the debt will not be suspended, which means that the time on the statute of limitations will continue to run.

Make a bankruptcy declaration

To get rid of your tax debt, file for bankruptcy. If you file for bankruptcy, the IRS will stop wage garnishment. In addition, when you do it, you receive an automatic stay, which prevents all collection actions. A few of these include foreclosure, repossession, and wage garnishment. This can have a significant impact on your credit score. Hence, be very careful. However, bankruptcy is an excellent way to get out of debt, including back taxes.

Request an Audit Reconsideration

The IRS will step in and make tax assessments on behalf of taxpayers who fail to file their income tax return or ignore an audit notice proposing additional tax due from a previously filed tax return.

Further, the IRS will prepare the return based on information received from third parties, such as a Form W-2 from an employer or a Form 1099-MISC for work performed by an independent contractor, among other things. The IRS prepares an SFR or Substitute for Return. The statute of limitations on collection begins once the IRS assesses the tax, triggering collection enforcement actions such as levies.

If taxpayers find themselves in this situation, they can file the return using the Audit Reconsideration procedure. Frequently, the IRS prepares a return with a higher tax liability than a return filed by the taxpayer. When preparing a substitute for a return, the IRS ignores advantageous filing statuses, multiple credits, itemized deductions, and dependents.

Set up a payment plan

Taxpayers who owe money to the IRS can ask for help. If you can’t pay your tax bill all at once because you can’t afford it, contact the IRS to set up a payment plan.

You can define a short-term or long-term payment plan for a small fee, depending on how much you owe. These plans allow you to repay your tax debt for over six years, converting a large one-time payment into a more manageable monthly payment.

You’ll have the freedom to manage your own money and make payments rather than having the IRS garnish your wages if you stay current on your payments.

Work with a tax professional

When working with the IRS and resolving difficult tax situations, tax professionals have a lot of experience. Working with a tax professional may be able to help you stop the IRS from wage garnishment. The expert will communicate with the IRS on your behalf, reducing the stress of dealing with tax debt and wage garnishment.

Takeaway

If you’re facing an IRS wage garnishment and aren’t sure if any of the options above are right for you, we can help. Platinum Tax Defenders have years of experience and a passion for assisting taxpayers in regaining financial stability.