Taxation & Estate Planning

What to do About Levies on Wages

By Darrin Mish

If you have not been paying your taxes despite the IRS' reminders and efforts in collecting from you, they may resort to imposing a levy (also known as garnishment) on your salary.  Your employer is obligated by law to cooperate and the IRS can take as much as 75 percent of your entire earnings, which leaves you with almost nothing. Such levies can be disastrous unless you know how to get out of them.

By definition, a levy on your wages means that the IRS has the right to take a big portion of your salary to settle your back taxes.  Usually, this would be only after a considerable length of time in which the IRS has unsuccessfully attempted to communicate with you over your tax debt.  What the majority of people do not understand is that a levy on your wages is not intended to essentially collect the money you owe the IRS. It is to put you under enough financial pressure that you ultimately call them and agree to a more equitable payment strategy.

There are ways to get yourself out of a levy on wages but it will not eliminate your tax debt totally.  The most obvious way is to work out a payment plan with the IRS.  In reality, sometimes people agree to a payment plan despite knowing they would not be able to keep to it just to buy some time to work out a different strategy.  But if a payment plan isn't going to work for your particular situation, you may want to consider the following options.

Another way is to apply for an Offer in Compromise.  This is a provision in tax law whereby you can receive approval to pay less than your total debt and eliminate the balance.  It isn't easy to qualify for such an offer and only a handful of people who apply for them get one.

Offers in Compromise are grouped into 3 categories.  The first is where you are unable to pay your total taxes because your taxes exceed the amount of money you earn less living expenses.  The IRS will analyze your total income and your total assets to see how much you will reasonably be able to pay. Instead of asking for the full amount, they expect you to pay this reduced amount. The second category is where you have been assessed a tax amount in error or part of the tax is not legally yours.  The final category is where you genuinely cannot pay the full amount of your tax due to legitimate reasons like being laid off, a death of a loved one or major illness.  In this case, you can offer to pay a reduced amount that is most of your total debt.

Levies on wages are not good for your credit rating and could potentially ruin your life. If you have received a notice, contact the IRS right away or discuss with a tax attorney about what options are available to you.

Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.

What to do About Levies on Wages is a post from: IRS Tax Problem Solver Blog - IRS Help

Full post as published by IRS Problem Solver Blog on February 28, 2010 (boomark / email).