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Wage Garnishment/ Bank Levy
Wage Garnishment or levy means the IRS seizes the part of your wages for your outstanding tax liability. If you do not pay your taxes (or make arrangements to settle your debt), the IRS determines that a levy is the next appropriate action. Bank Levy is the legal action by the IRS which allows them to take funds from your account for the taxes you owe.
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FIND OUTWhat is a Wage Garnishment/Levy?
Wage Garnishment or levy means the IRS seizes the part of your wages for your outstanding tax liability. If you do not pay your taxes (or make arrangements to settle your debt), and the IRS determines that a levy is the next appropriate action, the IRS may levy any property or right to property you own or have an interest in. For instance, the IRS could levy property that is yours, but is held by someone else (such as your wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions). Or, the IRS could seize and sell property that you hold (such as your car, boat or house).If the IRS levies (seizes) your wages, part of your wages will be sent to the IRS each pay period until:
- You make other arrangements to pay your overdue taxes,
- The amount of overdue taxes you owe is paid, or
- The levy is released.
Part of your wages may be exempt from levy and that exempt amount is based on the standard deduction and an “amount determined” calculated in part based on the number of dependents you are allowed for the year the levy is served
Wage Garnishment / Levy can also occur due to :
- Taxes you owe
- Owed child support
- Student Loans
- There is a court judgement against you.
Unlike other creditors the IRS has the power to garnish your wages even without having a judgement against you. When the IRS sends you notice for your overdue taxes which states the amount owed by you and the penalties, interest associated with it alongwith the date they are due , if the taxpayer does not comply the IRS can explore any option to make you pay your overdue taxes, & this can include the placing liens on your property, any future refunds you are entitled to and even garnishing your wages. Fortunately there are numerous options to settle your debts with the IRS, for instance setting up a payment plan , or settling the tax debt for less than what you owe ,because of that taxpayers can avoid wage garnishment.
How the Wage Garnishment / Levy Process Works
The IRS does not start seizing your wages right away before sending you a formal notice . The garnishment/ levy will only occur after these three requirements are met :
- The IRS assessed the tax and sent you a Notice and Demand for Payment (a tax bill);
- You neglected or refused to pay the tax; and
- The IRS sent you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy. The IRS may give you this notice in person, leave it at your home or your usual place of business, or send it to your last known address by certified or registered mail, return receipt requested. Please note: if the IRS levies your state tax refund, you may receive a Notice of Levy on Your State Tax Refund, Notice of Your Right to Hearing after the levy.
Can The IRS Garnish My Whole Paycheck?
Federal law limits what amount can be garnished from a paycheck every month or week. Information available on the amount which the IRS can withhold from your paycheck can be found on the IRS webpage .If the taxpayer is entitled to bonus in any given year wage garnishment is active the IRS can receive their entire bonus since the exempt amount is based on the time-period that your wages and bonus are paid. For wage levy purposes, the term salary or wages includes compensation for services paid in the form of fees, commissions, bonuses and similar items.
If you owe child support & your employer did not include that in your exempt amount in the wage levy then the IRS needs to be notified for the same. Once they have the required information the IRS will release from levy the amount you need to pay court ordered child support that the court ordered before the levy was received by your employer.
What is a Bank Levy?
Bank Levy is the legal action by the IRS which allows them to take funds from your account for the taxes you owe. When the bank levy starts the funds in the bank are frozen on the date levy is received by the bank. Normally, the levy does not affect funds you add to your bank account after the date of the levy. Once the bank account freeze is effective you have 21 days before the bank turns over the funds to the IRS.
Bank Levy Release
Bank Levy release can be effectively petitioned with the IRS in numerous ways to name a few- once the amount which you owe has been paid, the collection period ended before the levy was issued, releasing levy will help you pay your taxes , taxpayer agreed for an installment agreement which don’t allow for the continuation of levy or levy has created a economic hardship on the taxpayer. For more information taxpayers can refer to IRS Publication 594. Taxpayers should remember that the release of a levy does not mean they don’t have to pay the balance due. Taxpayers must still make arrangements with the IRS to resolve their tax debt or a levy may be reissued.
How we can help
We understand that wage garnishment/ bank levy can be financially devastating & painful for the taxpayers and our tax experts will fight on your behalf to effectively release wage garnishment /bank levy. Allay Tax can work with you to identify the best possible payment arrangement and request the IRS to release the wage garnishment/ bank levy. The taxpayers who have received notice of impending wage garnishment or bank levy should take action right away & call Allay Tax at 1-888-829-6667 or fill an online contact form.
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Reach out to us for a free consultation. Our tax experts can help you determine the best service to get relief from your debt.
