Wage Garnishment Release
What is Wage Garnishment?
The IRS can obtain a wage garnishment against your wages and earnings through your employer to satisfy your tax debt. When you obtain a wage garnishment release, the IRS agrees not to take any part of your wages to satisfy your tax obligation.
Similar to any other tax levy, the IRS obtains the right to your property, i.e., your paycheck, so that they can collect the debt you owe. For this method, your employer withholds a portion of your paycheck. Your employer then sends that portion to the IRS to pay off your tax debt. Wage garnishment can affect your gross wages, salary, bonuses, commissions, and retirement benefits. It can even affect your disability as well as your VA and social security benefits.
How Will I know If My Wages Are Being Garnished
The IRS will typically send you a number of notices of the amount you owe in taxes before garnishing your wages. If you do not attempt to pay off your debt in full or through an installment agreement, the IRS will then garnish your wages. The IRS will not notify you that your wages are being garnished. Instead, the IRS will directly issue a notification of garnishment to your employer. Your employer will then notify you that your wages are being garnished.
What is a Wage Garnishment Release?
A Wage Garnishment Release is just as the name implies. It is a way for the IRS to release your wages from garnishment. In order to obtain a Wage Garnishment Release, you must first request it from the IRS. There are three main reasons that the IRS will consider releasing your wages from being garnished:
- You have paid off your tax debt in full.
- You have entered into a collection agreement.
- You can prove that garnishment of your wages would lead to financial hardship and make it more difficult for you to pay off your tax debt.
Additionally, you may also reduce the amount of collections by amending or filing any missing or incorrect tax returns. Having a tax professional review your tax returns for any missed deductions may also help reduce the tax debt owed.
Am I Eligible for a Wage Garnishment Release?
The IRS sends several notices warning that a wage garnishment may be imposed against you. Therefore, they are reluctant to release the wage garnishment once it is imposed. There are rules and fees that the IRS must contend with in obtaining a wage garnishment. So, this is not an ideal method for obtaining full payment of a tax debt.
Meeting any of the above criteria and being in full tax compliance by filing all required tax returns is important. These criteria deem you are likely eligible for a Wage Garnishment Release.
In other words, you may be able to release your wages from garnishment if you:
- File for an Extension to Pay (ETP) – If you have not previously filed for an extension to pay and you have followed through on previous payment agreements, the IRS will typically accept an extension to pay which would automatically release your wages from garnishment.
- Enter a payment plan with the IRS – If you file for any type of installment agreement or other form of payment (OIC, CNC), the IRS typically releases your wages; however, if for any reason you do not follow through on your payment agreement, the IRS will garnish your wages once again.
- Are able to prove that garnishment of your wages would cause severe financial hardship and make it nearly impossible to meet your basic living expenses.
If you are in fear of your wages being garnished or have already received notice of garnishment from your employer, the best course of action is to consult a tax professional who can evaluate your specific tax situation and advise you on how to proceed. Give us a call today to discuss how you can avoid wage garnishment or how a wage garnishment can be released. Visit our tax resolution services page for more information.