Federal Guidelines for Garnishment
If you owe the IRS for back taxes, the agency has the authority to levy or seize your property. A specific type of levy is the garnishment of your employment wages each week. However, before the IRS starts to take a portion of your salary, there are specific guidelines it must follow. Understanding the IRS garnishment rules may help you prepare for the garnishment or even allow you to challenge and stop it.
Once the IRS assesses your tax, you will generally receive notice and a Demand for Payment of the amount due. If you fail to pay this invoice, at some point after you will receive a Final Notice of Intent to Levy and a Notice of Your Right to a Hearing.
These last two documents must be sent at least 30 days before the IRS begins to garnish your wages. Before it reaches this point, you should contact the IRS and attempt to resolve the issue, possibly by submitting a request to get on a payment plan.
When the IRS moves forward with your wage garnishment, your employer has no choice but to comply with the IRS and remit a portion of your wages to the agency to pay your tax bill. The IRS has more garnishment power than ordinary creditors insofar as it is not subject to the state and federal garnishment limitations, which means it can leave you with very little money each week to live on.
During 2013 for example, a single parent with two children who files as head of household can be left with as little as $397 per week. This means that if you earn $1,000 per week, the IRS takes $613 of it, and if you earn $2,000 per week, it can take $1,613. However, the amount of your garnishment will depend on how much tax you owe.
Unless the IRS agrees to an alternative resolution, such as a payment plan, there are a limited number of circumstances that require the IRS to cease garnishing your wages before your balance is paid in full. These include:
- The IRS discovers that the time period to collect the tax from you expired before it served the garnishment notice
- The IRS did not provide you the full 30 days to respond to the notice
- You declare bankruptcy
- The agency is considering your offer in compromise or request for installment plan when an appeal is in process
It is always possible to request an appeals conference during the initial 30-day period after receiving your final notices. This is referred to as a Collections Due Process (CDP) hearing.
However, you should be aware that this is not the appropriate forum to dispute the amount of tax you owe; the appeal only deals with issues relating to the garnishment, such as if the IRS violates one of its own procedures. Generally, you would’ve had the opportunity to dispute the tax long before the IRS sends the Final Notice of Intent to Levy.