Your payday is nearing and you are excited enough to receive your hard earned money. You look at the check and become totally shattered. You notice a major percentage of your salary is missing! You are called by the human resource department and informed that the IRS has put a wage garnishment against your income. You are only left with a couple hundred dollars to take care of your necessities. You ask yourself: How they can do this to me suddenly? The reality is, the IRS can easily garnish your wages and this article tells you how they carry out this procedure and the things you need to do when facing this awful situation.
The IRS will not garnish your wages without giving you notice and an opportunity to make payment arrangements. They will send different kind of computer generated notices based on situations like whether you have failed to file a tax return or haven’t paid your tax debts. If it is a personal tax debt, form 1040 is used while business notices are related to an Employee Identification Number (EIN).
If the taxpayer fails to respond to these notices by not paying the liability in full, a lien arises under the Internal Revenue Code (IRC sec. 6321) that attaches to all properties belonging to such person. A lien is simply a legal claim and does not involve actual seizure of property or garnishing wages to settle a debt. But a property with a lien on it is next to impossible to sell.
If the liability is not paid after the initial notice, the collection division of the IRS will send a warning letter CP504. This notice comes in certified mail and says “Intent to levy”. Thirty days after the letter is sent, the Internal Revenue Service has the right to levy your state income tax refunds which makes you probably owe the state as well.
A CP 504 notice does not grant the IRS right to levy your wages. But when they issue the CP 90 or Final Notice of Intent to Levy, there is nothing more threatening than that. If there is no response after 30 days from the issuance of the Final Notice, then the IRS can levy wages, bank account or any other assets the taxpayer own.
The IRS maintains a Wage and Income Transcripts which contains the taxpayer all income details such as W-2 wage information, all bank account particulars and any prior sources of 1099 payments. Once you come under the levy, IRS will send notice to all the employers (present and past) to withhold a major part of your wages and instruct the bank to freeze your accounts.
Since the IRS issue so many notices during the levy process, your tax problems can easily spread as news to your friends/ families and the public. Having your wage garnished by IRS not only put financial hardship on you but also can ruin your social life.
If you do get a levy, it is important that you take action. Don't be fearful. There is solution for all tax problems. Our expert tax attorneys have developed an IRS awareness guide and to get your free copy, visit our website IRSmedic.com now.