How A Paycheck Garnishment Takes Place

When you are arrears in your federal income tax payments, the IRS can attempt to collect what is owed by garnishing your paycheck. But, before the agency can direct your employer to start deducting monies, it first has to send a letter to your last known address informing you of its intent.

This is called the "notice of intent to levy" and must be sent at least 30 days prior to garnishment. The letter will inform you of the amount that the IRS believes you owe. It will also grant you the right to a hearing where you can argue your case against the levy.

If you either choose to not challenge the IRS, or you challenge and lose, the IRS will instruct your employer to deduct a specified amount from your paycheck and forward it directly to the IRS. If you have challenged successfully, you may convince the IRS that their records are wrong. In this case, they may remove the garnishment.

Alternatively, you may convince them to lessen the amount of money that they take from each of your paychecks. Once the garnishment begins, it will continue until the amount you owe is paid.

If, for some reason, you never received the letter from the IRS, hopefully your human resources department will notify you that monies are being withheld from your paycheck. Otherwise, the first time you realize that the IRS is taking money from you may be when you see a much smaller paycheck on your next payday.

Alternatively, if you have automatic deposit and you haven't checked your deposit stub, you may not notice it until checks that you have written start to bounce due to insufficient funds in your checking account.

In addition to garnishing your employee paycheck, the IRS can also garnish money from your social security paycheck, your social disability benefits, and your bank account. In the worse case, it can even force the sale of some of your assets. If you are a senior citizen with only limited income from social security, the IRS reaching into your social security check to remove much needed funds can play havoc with your life when you can least afford it.

There is a silver lining, however. And that is, if you are indigent enough and you really can't afford to pay taxes as well as maintain a minimal lifestyle, you can try to have your tax debt declared as "currently uncollectible." If the status of your tax debt is modified to this status, the attempt to collect your debt may be put on hold until your financial status has improved to the point where you are no longer in economic hardship.

No comments:

Post a Comment