Did you pay your taxes on time? Brace yourself-your wages are at risk! Yes, you heard that right. The IRS sends you wage garnishment notices or freezes your bank account to collect unpaid taxes. Mike Sullivan, a former IRS agent says, “Either pay off the tax debt or risk your income and bank account”. Act before your paycheck is at stake! ”

Let’s take a closer look at this.

Know When IRS Sends Wage Seizure And Bank Account Notices!

Unsettled Tax Debt: If you have unresolved tax obligations, the IRS may initiate the process of sending wage seizure notices.
Let’s see the process-

  • The IRS will send you a Notice of Intent to explain why you owe taxes, how much you owe, and your rights as a taxpayer.
  • If you do not respond to the Notice of Intent, the IRS may send a Notice of Levy to your employer. This notice will instruct your employer to withhold a portion of your wages and send it to the IRS.
  • The IRS will typically send you a Notice of Levy 30 days before they take action to seize your wages completely.

Outstanding Amount: The notices are typically issued when a substantial amount of taxes remains unpaid, usually a hefty amount.

No Resolution Attempts: If attempts to address the tax debt, such as negotiations or payment plans, have not been made, the IRS resorts to issuing wage seizure warnings.

All IRS Remedies Fail: The notices indicate that the IRS takes legal action to collect the overdue taxes, potentially leading to the seizure of a portion of your wages.

Lack of Cooperation: If there is a lack of cooperation in resolving the tax debt issue, the IRS may take proactive measures, including wage seizures.

4 Ways To Avoid Wage Seizure and Bank Account Notices!

Mike Sullivan, a former IRS Agent has dealt with wage seizure notices almost daily. He knows it better when the IRS sends you a notice and when you can avoid them. Working for nearly a decade with the IRS, Mike got you an insider scoop!

  1. Early Communication is Key:
    Mike emphasizes the importance of open communication with the IRS. If you’re facing challenges meeting your tax obligations, don’t wait. Reach out to the IRS promptly to discuss your situation. This proactive approach often leads to more flexible solutions.
  2. Negotiate a Payment Plan:
    Drawing from his IRS experience, Mike suggests negotiating a reasonable payment plan. The IRS is often willing to work with taxpayers to establish a plan that fits their financial capabilities. This can prevent the need for wage seizures by ensuring a structured approach to settling the tax debt.
  3. Explore Offer in Compromise (OIC):
    Mike recommends exploring the option of an Offer in Compromise. This allows you to settle your tax debt for less than the total amount if you meet specific qualifying criteria. While not suitable for everyone, it can be a powerful tool for those facing financial hardship.
  4. Stay Informed and Respond Promptly:
    Being aware of your tax situation is crucial. Regularly check your mail for IRS notices, and if you receive one, respond promptly. Ignoring notices increases the risk of escalated actions, including wage seizures.

Know the IRS Process To Collect Overdued Tax From You!

  • Wage Garnishment Notice: IRS sends Form 668-W, in detail with the garnishment and withheld amount.
  • Wage Garnishment Order: Employer receives Form 668-W and is legally bound to comply with IRS instructions.
  • Reduced Paycheck: Post garnishment, your paycheck reflects a reduced amount based on disposable income.
  • Continued Garnishment: Continues until full tax debt payment, even after payment arrangement.
  • Release of Garnishment: IRS releases garnishment post full tax debt payment, confirmed by Form 668-C.
  • Recovery of Excess Withholding: File Form 843 if IRS withheld more than needed for potential refund.
  • Credit Repair: Rebuild credit with timely payments, low credit card balance, and credit counseling.

Defend Your Savings: Stop IRS seizures in 9 ways!

You can prevent IRS seizures even without legal hassles-

  • Timely Communication: Respond promptly to IRS notices. Communicate openly with the IRS about your financial situation and explore available options for resolving tax debt.
  • Negotiate Payment Plans: Work with the IRS to establish a reasonable payment plan that aligns with your financial capabilities. This can prevent the need for wage or bank account seizures.
  • Explore Offer in Compromise (OIC): Investigate the possibility of an Offer in Compromise, allowing you to settle your tax debt for less than the full amount if you qualify.
  • Stay Informed: Regularly check and respond to IRS correspondence. Ignoring notices can lead to escalated actions.

If you are thinking to consult with a tax professional or attorney for personalized advice, Mike has got you covered!

  • Due Process: The IRS follows due process, providing notices and opportunities for taxpayers to address their tax debt before resorting to seizures. Understanding your rights in this process is crucial.
  • Right to Appeal: If you disagree with IRS actions, you have the right to appeal. Request a Collection Due Process (CDP) hearing. The hearing will be held before an impartial IRS employee who will review your case and make a decision
  • Bankruptcy Protection: In certain cases, filing for bankruptcy may provide protection against wage and bank account seizures. Consult with a bankruptcy attorney to explore this option.
  • Financial Hardship Considerations: The IRS takes into account a taxpayer’s financial hardship. If you can prove that a seizure would cause undue hardship, it might impact the IRS’s decision.
  • File a lawsuit in federal court: You may also have the right to file a lawsuit in federal court to challenge the IRS’s decision to seize your wages and freeze Bank accounts.

Concluding Thoughts

In the realm of IRS wage garnishment and bank account seizures, staying informed and acting promptly is your best defense. From the initial notice to the reduced paychecks, it’s a journey that demands attention. Communicate openly with the IRS, explore payment plans, and understand your rights.

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Author

Mr. Michael D. Sullivan

Michael D. Sullivan is the founder of MD Sullivan Tax Group. He had a distinguished career with the Internal Revenue Service for 10 years. As a veteran IRS Revenue Officer / Agent, he served as an Offer in Compromise Tax Specialist and Large Dollar Case Specialist.

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