Many individuals and businesses in the USA find facing an IRS levy or wage garnishment stressful. A levy is one of the harshest actions the IRS can take to collect unpaid taxes, allowing it to seize assets, including wages, bank accounts, and even property. When wages are garnished, a portion of your paycheck is automatically redirected to the IRS, making it difficult to manage your day-to-day expenses.
However, there are ways to stop this from happening. This article will help you understand what an IRS levy and wage garnishment is, how they work, and, more importantly, how you can resolve them with the help of tax resolution experts at V Tax Services.
What Is an IRS Levy?
An IRS levy is a legal action that permits the IRS to seize your property to satisfy a tax debt. The IRS can target various assets, such as your bank accounts, wages, retirement accounts, or personal property. This drastic step is usually taken after several warnings from the IRS, including notices of unpaid taxes.
Types of Levies
● Bank Levy: The IRS can freeze and seize funds directly from your bank account.
● Wage Garnishment: A portion of your wages is deducted directly from your paycheck and sent to the IRS.
● Property Seizure: The IRS can seize and sell your property, including your home or car.
What Triggers an IRS Levy?
The IRS will issue a levy only after sending several notices, including a “Final Notice of Intent to Levy” and a “Notice of Your Right to a Hearing.” If ignored, the IRS may proceed with a levy to collect the taxes owed.
Common reasons for an IRS levy include:
● Failure to pay taxes after filing a return.
● Ignoring IRS notices.
● Accumulating significant tax debt over time.
How Does Wage Garnishment Work?
Wage garnishment allows the IRS to collect a portion of your paycheck until your tax debt is fully paid off. Depending on your income and tax debt, the IRS can take a significant portion of your earnings, leaving you with little for personal expenses.
Limits on Wage Garnishment
The IRS does not have to follow state-specific rules on garnishment limits. While they leave you with a basic amount to cover essential expenses, the rest of your paycheck can be claimed, causing severe financial difficulties.
Consequences of IRS Levy and Wage Garnishment
Once a levy is issued, it can lead to:
● Severe financial stress: Losing a large portion of your income or assets can make it difficult to pay for basic needs.
● Asset loss: In extreme cases, you could lose valuable property, including your home.
Stopping an IRS Levy or Wage Garnishment
You do not have to suffer indefinitely the consequences of a levy or wage garnishment. There are several ways to stop these actions:
Pay the Tax Debt in Full: The most straightforward way to stop a levy or garnishment is to pay the owed taxes. However, this is not feasible for most people.
Settle Your Tax Debt: If you can not pay the total amount, you may qualify for a settlement, such as an Offer in Compromise (OIC), which allows you to spend less than the total amount owed.
Installment Agreement: You can arrange an installment agreement with the IRS to make manageable monthly payments. Once in place, the IRS will release the levy.
Prove Financial Hardship: If the levy causes significant financial hardship, the IRS may release it temporarily. You must show evidence that the levy prevents you from meeting basic living expenses.
File for Bankruptcy: In some cases, bankruptcy can halt IRS collections, though this comes with its consequences and complexities.
Common Misconceptions About IRS Levies and Garnishments
Many believe that there is no way out once the IRS issues a levy or garnishment. However, this is not true. IRS levies and wage garnishments can be reversed or avoided entirely with the correct tax resolution strategy. Another common misconception is that ignoring IRS notices will make the problem disappear. This only escalates the situation and results in harsher actions like levies.
Why Timely Action Is Important?
Acting quickly is essential when you receive a levy notice. The longer you delay, the harder it becomes to release the levy or garnishment. The IRS moves fast when collecting unpaid taxes, and you could lose access to essential funds or property. Contacting a tax resolution service as soon as possible will significantly improve your chances of successfully resolving the issue.
How Tax Resolution Services Can Help
Dealing with an IRS levy or garnishment can be challenging. This is where professional tax resolution services can help. V Tax Services assists individuals and businesses with their tax issues, providing personalized solutions based on your unique needs.
The V Tax Approach:
● Detailed Case Review: We will assess your financial situation, tax history, and IRS communications to determine the best strategy for resolving your levy or garnishment.
● Negotiation with the IRS: Our experienced tax professionals will work directly with the IRS to stop collection actions while working on a long-term resolution plan.
● Custom Solutions: Whether you qualify for an Offer in Compromise, need to set up an installment agreement, or can prove financial hardship, we will guide you through every step.
● Protection of Assets: Our priority is to stop the IRS from seizing your assets and ensure your financial stability.
At V Tax Services, we understand how overwhelming an IRS levy or wage garnishment can be. Our expert team is dedicated to helping you regain control of your finances by stopping IRS collection actions and developing a plan to resolve your tax debt. We are here to assist whether you need help negotiating with the IRS or setting up an installment plan.
I will contact you in a few days!