The term garnishment refers to the process of getting a monetary judgment against a defendant by regulating a third party, otherwise known as the garnishee, to pay a specific amount of money, which is payable to the defendant, directly to the claimant. When it comes to IRS wage garnishment, the policy of jurisdiction may permit collection without court order or judgment.
In the United States, the IRS garnishment of wages is the deduction of money from the monetary compensation of an employee to include the salary, at times as a consequence of a court order. The IRA tax rules only execute such garnishments up to 25% of the disposable revenue that the employee makes. The wage garnishments carry on until the entirety of the debt is completely paid or arrangements are established to recompense the debt.
The types of debts that may result in garnishments are:
- Defaulted student loans
- Child support
- Unpaid court fines
- Other types of monetary judgment
When the order is served on an employer, garnishments will be treated as a component of the payroll. At times though, the net pay of the employee does not satisfy the total amount of the garnishments. In such instance, the proper order to take garnishments should be fulfilled.
To settle tax debt such as local tax, federal tax, and even credit card garnishment, you should take the federal tax garnishments into consideration followed by the local tax garnishments, and then the credit card garnishments. Your employer will receive a notification informing them to withhold a specific portion of your wages for payment and should not stop IRS wage garnishment until the debts are paid.
You should understand that wage garnishments can profoundly and negatively affect your reputation, credit, and even your ability to procure a loan or open and maintain a bank account.
Federal Tax Rules
In the United States, the federal tax law stipulates a few requirements that should be met before the IRS begins wage garnishment:
- The Internal Revenue Service has reviewed the tax and should have forwarded a written Notice and Demand for payment;
- You, as the taxpayer must have ignored or declined to pay the tax within the period of time predetermined in the notice; and,
- The IRS should have forwarded a Final Notice of Intent to Levy as well as Notice of Your Right to a Hearing no less than 30 days before the levy.
Preventing Wage Garnishments
Here is some wage garnishment advice & tips that you can follow to prevent the IRS from garnishing your salary:
- Know your options in settling your debts. Since you are having problems with the federal tax, you will most likely fail to receive a tax refund advance, so your best bet is to learn about the IRS garnishment system. Because the IRS will provide plenty of time for you to avoid it, ensure that you make the most out of the given time.
- If you can opt for debit consolidation loan to fix your credit card problems, for your tax issues, you can apply for an installment agreement with the Internal Revenue Service. Since the IRS encourages you to pay slowly but surely, they will most likely grant you the opportunity to reimburse your taxes over a particular period of time. The payable amount will depend on your ability to pay that time.
- Check the offer in compromise option. If you can’t think of any other way to clear your tax debts, the IRS may give you an offer for debt settlement that may be lower than what you actually owe. Remember though that this option will only be available to you if the IRS deems that the owed amount falls under the uncollectible status and pushing you to pay such amount will cause serious financial difficulties in your life.
- Ask the IRS to consider and treat your back taxes as not collectible. If the bureau perceives that you are not in a position to pay the taxes, they will no longer try to collect your debt. They will just wait until you are financially stable before asking you to pay back your owed amount.
Aside from preventing IRS wage garnishment, you should also inhibit yourself from filing bankruptcy since this does not affect your current tax situation. In addition, bankruptcy will make it more complicated for you to be approved for loan or credit later.