HOW TO STOP A WAGE GARNISHMENT (AKA LEVY)
In order to collect taxes the IRS and many state tax agencies will use a wage levy aka garnishment. A warning letter will be sent to you prior to the levy being served that tells you the tax agency can serve a levy on banks, employers, retirement plans, etc. If you do not respond with a phone call to arrange a payment plan, some other settlement approach or evidence that you do not have enough money to pay the tax collector, your employer will be required to deduct an amount from future paychecks that will be applied to your old tax debt. The IRS takes about 80% of your take home pay, the state can take up to 25%.
What should you do? Decide if you can handle something like the following. A wage levy can be released or modified when the IRS approves a monthly installment agreement, a hardship suspension or receives an Offer in Compromise. This means you need to calculate and write down your average monthly income versus your average monthly allowable necessary living expenses. The IRS allows reasonable necessary living expenses, but how do you know what expenses the IRS allows and does not allow? They allow food, clothing, rent/house payment, utilities, car expenses, car payments, medical insurance, medical expenses, life insurance, etc., if the amounts are "reasonable and necessary". After you have paid all of your reasonable monthly living expenses, how much would you have left over to pay the IRS on a monthly basis? Or, are you in a financial hardship that warrants a 12 month suspension of all collection action? And lastly you need to present one of the above to the IRS as a proposed resolution.
But, before you make that call to the IRS, ask yourself, "do I have the ability to negotiate with a tax collector that does collections for a living?" If you ask someone who has been doing this kind of work for 25 years, the answer is definitely no. Maybe your best course of action is to hire an experienced representative to resolve your tax problems.
However, if you have ignored the notices and the garnishment (wage levy) goes into effect, we may be able to reverse or reduce the levy. Call Demetriou, Montano & Associates to help you work out something with the tax collector. We are experienced at knowing what to say and what NOT to say in these situations.
If you or your representative do not correctly analyze your financial "ability to pay" and/or do not contact the IRS expeditiously the IRS may decide to use other enforcement actions such as a levy on your bank account or a lien on your property. We can help you stop all of these collection actions and put in place a solution that best fits your circumstances.
