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How Wage Garnishments Work LifeBack Tax
Wage garnishment is a type of levy in which part of a debtor's income is seized and given to the creditor to pay outstanding debts. Wage garnishments may also be referred to as wage levies, earnings withholding, or income executions. Wage garnishments may not only attach to wages and salaries, but also bonuses, commissions, and similar forms of income as well. Because wage garnishment is often an inconvenience for the debtor's employer, federal law protects employees from being terminated due to wage garnishment, as long as their wages are only being garnished for one debt. The Internal Revenue Service and state tax authorities may resort to wage garnishment as one of several extreme tactics to collect unpaid income taxes from delinquent taxpayers.
The IRS may garnish wages for back taxes that remain unpaid 30 days after the taxpayer has been sent a Final Notice of Intent to Levy. When the IRS garnishes a delinquent taxpayer's wages, they send the taxpayer's employer a Notice of Levy on Wages, Salary, and Other Income. The employer is then required to withhold part of the employee's paycheck for each pay period and send it to the IRS. The taxpayer is given three days after the levy notice to report their filing status and dependents to the IRS, which determines how much of their income is exempt from garnishment. The IRS continues to garnish the taxpayer's wages until their tax debts are paid or the levy is released.
The IRS is unaffected by the usual restrictions on wage garnishment. Unlike wage garnishment for private debts, the IRS may levy your wages without requiring a court order. While federal law mandates that private creditors may only garnish up to 25% of your disposable income per week, the IRS is permitted to seize all of your non-exempt income, which is based on your standard deduction and how many dependents you have. (Note that while state tax agencies are also unaffected to the usual limits on wage garnishment, many states set their own limits on garnishing wages to collect unpaid state taxes, typically at 25% or less of disposable income.)
Since wages are levied continuously, IRS wage garnishments can cripple your ability to pay bills or cover other financial obligations. For taxpayers who are already facing wage garnishment for other reasons, getting hit with an IRS wage levy can even put their jobs at risk. If your wages are being garnished for unpaid income taxes, we at Lifeback Tax are here to defend you and your livelihood from economic hardship. We will argue your case before the IRS or your state's tax agency, and negotiate to have your income released from levy.
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