How would I know if my wages are getting garnishment?

Besides noticing a change in your regular pay, you employer will inform you, and you would have already received one or more notices informing you of their intent to do so and ask you to make other payment arrangements.

What is Trust Fund Penalty?

A Trust Fund in terms of employment tax should not be mistaken with a trust fund in terms of wealth management. This is the payroll tax amount assessed to the officers of the business. Tax resolution can help reduce and or arrange the payment of these taxes.

What is a Trust Fund Recovery Penalty (TRFP)?

A Trust Fund Recovery Penalty can be assessed if the unpaid trust fund taxes cannot be immediately collected from the business. This often happens if the business falls on hard times and taps into that fund for any reason. According International Revenue Code 6672(a) an individual can be held liable for penalty for willful failure to collect, account for, or pay to the IRS the taxes for the business.

Who is Held Responsible for the TRFP?

According to the IRS, the TRFP can be assessed against any person who is: responsible for collecting or paying withheld employment taxes, willfully fails to collect or pay the taxes.

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 and 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 and 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:

In addition to these three main reasons, 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?

Since the IRS sends several notices warning that a wage garnishment may be imposed against you, they are reluctant to release the wage garnishment once it is imposed. The rules and fees that the IRS must contend with do not make wage garnishment an ideal method for obtaining full payment of a tax debt.

If you meet any of the above criteria and you are in full tax compliance in that you have filed all required tax returns, 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.
You 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.
You 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.

Next Steps:

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.