Wage Garnishment for Unpaid Taxes
The IRS is not going to start garnishing your wages without getting in touch with you first. This is a last-ditch effort, something that is done when nothing else has worked. They are going to, among other things, send you multiple letters telling you what you owe and requesting payment. Only after this has gone on for some time with no result are they going to resort to wage garnishment.
What Is Garnishment?
Wage garnishment is simple: The IRS takes money directly out of your paychecks to make up for the taxes that you owe. The IRS will contact your employer, explain the situation, and ask the employer to do the work on their end. They will then remove the money from your paycheck and, instead of giving it to you every two weeks, they'll mail that portion to the IRS.
The IRS is not going to take all of the money that is owed at once, of course, as most people owe far more than they would get in a single paycheck. Instead, they are just going to take smaller portions on a consistent basis until the debt has been cleared.
Why Is Wage Garnishment Used?
The primary reason that wage garnishment is used is because it is one way in which people cannot get around paying their taxes. This is money that is impossible for a person to hide -— in an offshore bank account, for example —- because the IRS takes a cut before it even gets to them. They can't avoid it, so they are forced to pay their taxes over time. In many ways, it is the only sure bet that the IRS has to claim what is owed.
The IRS Does Not Want to Use a Wage Levy
People sometimes think that the IRS uses wage garnishment maliciously or unexpectedly, but the fact of the matter is that the IRS would rather solve the issue in almost any other way. That's why they give you so many notices first, including an Intent to Levy notice about a month before they start taking the money.
As such, there are numerous ways for you to stop this from happening. Some of them can be used before the levy begins -— after you get the notice, for example -— or they can be used after the IRS has already started taking money from your paychecks. If you accidentally waited too long to resolve the issue and the levy is imminent or already in place, you can:
- Pay off the full amount that you owe to the IRS.
- Ask for a compromise; rather than taking money from your paychecks for months or years, the IRS may allow you to pay much less than you owe, as long as you do it all up front.
- Ask to set up a payment plan; this stops the direct levy, but you then have to pay into the plan on your own.
The Garnishment May Be a Hardship
It is not the IRS's intention to make it so that you can't put food on the table. If the garnishment is a financial hardship and you can't pay your bills —- your mortgage, for example, or your utilities -— then you may be able to have it stopped. However, you do have to prove that it is a hardship infringing on your basic needs; the IRS will not lift the levy simply because the garnishment is cutting into money that you wanted to use for extras, vacations and things of this nature.
The information on this page is meant to provide a general overview of the law. The laws in your state and/or city may deviate significantly from those described here. If you have specific questions related to your situation you should speak with a local attorney.
Additional Tax Articles
- Child Tax Credits and Deductions
- Tax Law
- Failure to File Taxes
- What Happens if I Default on an Installment Agreement?
- What happens if I cannot file my income tax return on time?
- Failure to File Taxes
- Tax Law Basics
- What Is Federal Income Taxation?
- Can the IRS Levy or Seize Property Without Notice?
- Can I request a tax extension?
- Do I Have To Pay My Taxes?