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Could failing to file and pay your taxes end in wage garnishment?

On Behalf of | Apr 30, 2020 | Tax Debt

When you go too long without paying on a debt or when you incur liability for someone else’s losses, those individuals can potentially take you to court and secure a garnishment of your wages.

Garnishments are effective ways to help creditors collect money. They bypass the person repaying them and typically have the funds automatically withdrawn from the paycheck before the individual with garnished wages ever has access to those funds.

While garnishment may benefit those owed a debt, for those dealing with debt, garnishment can throw their whole budget off and put them at risk of worsening financial hardship. If you owe an outstanding balance on your federal taxes, you might wonder whether the government could seek a garnishment of your wages in order to force the faster repayment of the outstanding tax amount owed.

When the IRS takes a portion of your wages, they call it a levy

The Internal Revenue Service (IRS) has much more power and authority than the average person or business attempting to collect on a debt. The IRS doesn’t necessarily need to go to court in order to take a portion of your paycheck by assessing a levy against your wages.

Instead, they simply notify you in writing at least 30 days prior to initiating the levy and then instruct your employer or their payroll company to deduct a specific amount of your wages to help repay your taxes owed. Unless you request a hearing and fight back, they can garnish or levy your income without going to court. Although a levy can be a way to quickly address outstanding tax debts, the reduction in your take-home pay could present a financial hardship for you and your family.

Can you challenge a levy if it leaves you struggling?

The IRS wants their money, but they also don’t want to leave people in untenable financial circumstances where they can’t meet obligations for their family. If your tax levy leaves you unable to pay your mortgage or afford groceries, you can potentially request the release of a levy.

Whether you have an existing levy or want to go to court to fight a pending one, being proactive about an IRS attempt to levy your wages can protect your financial security.