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Question

Can the IRS garnish my wages or take money directly out of my bank account for not paying my Federal taxes in Texas?

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Answer

When it comes to unpaid taxes, a tool that the IRS uses to collect is wage garnishments. There are several notices that the IRS sends out to the respective taxpayer making them aware of their unpaid taxes and the garnishment that will be put in place if the taxes remain unpaid. If no payment comes forth, a notice then goes to the taxpayer’s employer, telling them a garnishment will be put in place. A portion of nonexempt wages will be going to the IRS for the foreseeable future until the wages pay off the sum owed, or the garnishment releases.

So, what notices does the IRS send out?

  1. CP14: This warns the taxpayer that a balance is due, demands payment for said balance and warns about wage garnishment.
  2. CP501 & CP503: This follow-up notice repeats the information of the first.
  3. CP504: This will describe an intent to levy.
  4. LT11/Letter 1158: This serves as a 30-day notice for the respective taxpayer to contest the levy. They can do so by requesting a hearing. After 30 days, the IRS issues a notice of garnishment to the employer.

How is wage garnishment determined?

There is no standard wage garnishment figure that everyone must abide by. The respective taxpayer will have a form to fill out. On that form they will list:

  1. Filing status
  2. Number of dependents claimed

These two factors will pair against the frequency of one’s pay. Publication 1494 will have more information about this process. For example, a taxpayer with 0 dependents with weekly pay would have $234.62 exempt from the levy. Any income made above that goes to the IRS.

But, there are scenarios that warrant a release of this wage garnishment. For instance, the taxpayer can establish an installment agreement. There are multiple kinds of installment agreements that serve to repay the taxes owed.

But sometimes even an installment agreement is not possible. Maybe the taxpayer has unfiled returns, or they’re simply not making enough money. Garnishment is meant to pay off debts, not put one in aggressive financial hardship.

Facing wage garnishment is intimidating and scary. Reaching out to a legal professional experienced in tax law could make a huge difference in handling a case, managing the stress, and giving a more fully formed outlook for the future.

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