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When the IRS begins collection actions to satisfy a tax debt, there are many methods in its arsenal. One of the most damaging collection actions is a wage garnishment, due to the fact that it is continuous and directly affects a taxpayer's income and well-being.
Wage Garnishment Process
When the IRS decides to implement a wage garnishment, it will send the taxpayer a Notice of Intent to Levy. In the letter, taxpayers will be notified they have 30 days from the notice date to make arrangements to pay the debt amount or appeal the debt before the garnishment commences.
The IRS calculates the amount it will seize per pay period through its own formula. The factors the IRS considers includes the amount of the tax debt, dependents claimed, filing status, and the length of the Statute of Limitations. However, taxpayers can expect between 30-75 percent of their wages to be sent to the IRS every paycheck.
Lower income taxpayers can appeal the garnishment if they can prove that the collection action would put them in financial hardship. This status means that a taxpayer would be unable to pay for basic living necessities due to the portion the IRS takes from their wages. The IRS defines basic necessities as:
- Rent or Mortgage
- Utilities: electricity, gas, water only
- Transportation expenses: gas and car payments for one car
- Medical Bills
Taxpayers who are suffering under a wage garnishment should consult with a tax professional to resolve their tax debt. Call now for a free consultation about your tax situation!