What To Expect at A Wage Garnishment Hearing

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Knowing What to Expect Can Help You Prepare

No one relishes the thought of having their wages garnished for any reason. It is hard enough to get by in today’s economy without the stress of an even smaller paycheck due to garnished wages. At the same time, you do have recourse by filing for a hearing. A judge will evaluate your circumstances and either uphold the court order or levy, or he or she will overturn it based on inability to pay.

Steps To Take

In order to secure an exemption, you’ll need file a written petition for a hearing date. You’ll need to include the following details:

  • Your case number
  • You full legal name
  • Your formal petition requesting reduction or elimination of the garnishment
  • Exemption calculations

Once you file your written request with the court clerk, you’ll receive a notice stating whether or not your petition was granted, and if so, your hearing date. It is essential for you appear on the day and time assigned to you.

What You’ll Need to Bring

  • Proof of dependents and your exemptions
  • Paystubs
  • Receipts for any payments you may have already made
  • Proof of bankruptcy filing if your attorney has not yet notified the court of bankruptcy proceedings

At this stage, you must show the presiding judge you are filing for an exemption based on inability to pay, or if you are requesting a lesser garnishment from each paycheck. The judge will consider the following factors when evaluating your case:

  • Whether or not you have filed for bankruptcy
  • You have already paid the debt in full
  • Whether or  not you provide 50 percent of the support of any dependents in your household
  • Whether or not you are the primary earner and head of household
  • You have an existing payment agreement established with the creditor or tax agency, and that agreement is in good standing

If the judge rules in your favor, your garnishment can either be eliminated altogether or reduced to less than the customary 25 percent of your pay. If the judge rules against you, the wage garnishment will move forward as ordered.

If you are facing a garnishment hearing, it will be in your best interest to have legal representation. A qualified tax attorney will be able to assist you with tax-related wage garnishments or levies. Your attorney will see to it that you fully understand your rights, and will ensure your rights are upheld.

If you are facing a tax-related wage levy or garnishment, we have tax attorneys on staff to assist you. Get started today by either clicking on the white “start chat” button at the top of any of our webpages, or by giving us a call. Don’t go it alone. We can help.

 

A Look At IRS Levy Limitations

Chances are you’ve heard horror stories about the IRS and other government agencies bleeding taxpayers dry in an attempt to collect past due taxes. While its true the IRS doesn’t need a court order to levy(garnish) your wages, the IRS does have a strict protocol for garnishing wages to satisfy a past due tax debt.

Allowable Take-Home Pay

The garnishment activities of most creditors (credit card companies, banks, mortgage companies, credit unions) are limited by each state’s garnishment laws. As a general rule, they can claim no more than 15 to 25 percent of your earnings.

The IRS, however, doesn’t determine by garnishment amount by a percentage. Instead they base it on the amount you are legally entitled to keep for yourself in order to continue to pay for basic needs such as housing, clothes and food.

The IRS utilitzies your net income (income after taxes and deductions) in determining how much of your wages will be garnished.

The IRS will also look at the number of dependents. They will send your employer a 668-W form, which you’ll fill out to claim you dependents. If your employer doesn’t give you this form, they are on the hook legally for your tax debt, plus any penalties for not giving you the form.

The number of dependents you claim on the 668-W form will be used in part to determine the garnishment amount.

Extenuating Circumstances

In some cases, the IRS won’t garnish your wages if you meet any of the following criteria:

  • 65 or older
  • Receiving income from unemployment insurance or worker’s comp.
  • Blind

Poverty Guidelines

If your income is at or below the poverty line for your household size, the IRS may be unable to claim a portion of your paycheck. By law, the IRS must leave you with enough income to pay for your most basic needs: food, rent/mortgage, utilities.

Your wages may not be garnished at all if your income is already too low to afford to pay for necessities. If they move to deduct anything at all from your paycheck, it will only be a smaller percentage that is more affordable for you.

If you are facing a wage levy, a qualified tax pro can help you understand your rights and make sure they are upheld as you go through the garnishment process. Your tax professional will negotiate with the IRS on your behalf, and can help you arrive at a more realistic solution to your back tax woes.

Facing wage garnishment from the IRS is stressful. By understanding the rules and limitations of IRS wage garnishment or levy, you will be in a better position to understand your rights and the legal limitations that prevent the IRS from taking a disproportionate amount from your paycheck.

How To Appeal An IRS Wage Garnishment

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Facing IRS wage garnishment is no joke. Unlike credit card companies or banks, the IRS doesn’t need to obtain a court order to garnish your wages. Instead, they send a notice to both you and your employer notifying you of their intent to garnish your wages, usually for non-payment of an outstanding tax debt.

The IRS will typically garnish your wages if all other attempts to collect on your tax debt have failed, especially if you haven’t responded to any of the IRS’s correspondence, or if you haven’t made a good-faith effort to repay your tax debt. Here are some tips on appealing your IRS wage garnishment:

You need to act quickly once you receive the Notice of Intent to Levy from the IRS. You have a 30-day grace period during which you can appeal. Don’t wait until the last minute. Take action the day you receive the notice. Call the IRS at the number shown on the letter. You can request an appeal if any of the following apply to you:

  • You received the IRS notice while you are filing for bankruptcy
  • The legal timeframe (statute of limitations) for the debt has expired
  • You’ve already paid the IRS in full
  • You were never given the chance to appeal the debt
  • You qualify to file for innocent spouse relief

Use The Correct Form

You must use the proper form in order to file your appeal. You can find IRS Form 12153 (Request For A Collection Due Process or Equivalent Hearing) on the IRS website. This form will formally start your appeal process, so be sure to fill it out completely and accurately. It will need to be mailed directly to the division indicated on your Notice of Intent to Levy; you won’t be able to email it or fax it. Be sure to send it via certified mail with a return receipt.

File For Garnishment Exemption

If you feel you can’t afford to have your wages garnished by the IRS, you can file an appeal in court. You must provide documentation that supports your argument. The court will want to know about your total household income, the number of dependents you support, your fixed expenses (rent, mortgage, insurance, car payments, utilities, child/dependent care), any unique circumstances that prevent you from supporting yourself or your family, such as prolonged illness or permanent disability.

Be sure to bring the following to court:

  • Income documentation: paystubs, 1099 forms, disability/public assistance award letters, copy of divorce decree showing or other document verifying child/spousal support income.
  • Expenses: rent/mortgage statements, property tax statement (if you own your home), copies of utility bills, copies of car payment statements, child/dependent care receipts, student loan statements, and statements for any other fixed expenses you have.

If the court rules in your favor, it will order the IRS to release the garnishment order or levy.

If the thought of appealing an IRS wage garnishment is intimidating, you’re not alone. Most people elect to hire a tax professional who can walk them through the process, explain their rights, and represent them before the IRS. Appealing an IRS wage garnishment can be a long, complicated and confusing process. You must be able to follow the IRS’s strict appeals protocol to the letter if you want a favorable outcome. A qualified tax pro can make sure everything is taken care of, down to even the  smallest detail.

Facing an IRS wage garnishment is a stressful experience. While you do have the option to file for an appeal and to seek a court order to release the garnishment(levy), hiring a tax pro is your best defense. A qualified tax advisor can file the appeal on your behalf, walk you through the appeals process and make sure your taxpayer rights are upheld.

If you’re facing an IRS wage garnishment, we can help. Get started today by clicking the white “start chat” button on the top of the page, or by giving us a call. You don’t have to go it alone.

 

 

What You Need to Know About IRS Wage Garnishment

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Of all the scary notices issued by the IRS, a Notice of Intent to Levy is by far one of the most unsettling, especially when that levy involves your wages. IRS wage levy or garnishment involves grabbing a percentage of your paycheck until the debt is satisfied. Wage garnishment can be in place for as long as it takes for the debt to be cleared.

Is The IRS Playing Fair?

The IRS is required by law to provide written notice of intent to levy your wages and/or assets. You have the right to appeal this notice within 30 days. You can also file for an exemption in court.

The IRS cannot collect on a debt that is more than 10 years old. They also cannot collect if you are currently appealing the debt, or if you have filed for Bankruptcy protection.

You can also offer to settle the debt outright.

Seizure or Levy of Assets

If the garnished portion of your wages isn’t enough to satisfy the outstanding debt, the IRS has the option of levying other assets such as investments, bank accounts, cars, RVs, boats, real estate, inheritances and insurance in order to satisfy the debt.

Credit Impact

Any IRS tax levy activity will be shown as a public record on your credit reports, and can be visible for seven years or more. Your credit score will take a hit, and you may have a hard time qualifying for any of the following:

  • New car loans
  • Mortgages
  • Rental housing
  • Some categories of employment
  • Credit cards

If you do manage to qualify for any kind of financing, the interest rate will be higher than for a consumer with a better credit score. You may also be subject to a larger deposit (such as for rental housing).

What You Can Do

As mentioned before, you do have the right to file an appeal and/or to seek an exemption in court.Whatever you do, don’t disregard the notice. Uncle Sam means business.

If you are facing wage garnishment, the IRS can attach a portion of your paycheck for as long as it takes to pay off the debt you owe. The IRS can also seize certain assets, in addition to any future tax refunds until the debt is satisfied. Your credit rating will suffer.

This is one of those instances where a qualified tax advisor can save you time, money and emotional distress. Don’t wait until the last minute to reach out. We help distressed taxpayers address such crises as wage garnishment and/or asset seizure.

Get started today by clicking the white “Start Chat” button in the upper right-hand corner of any of our webpages. Don’t face a tax crisis alone. We can help.