The Internal Revenue Service (IRS) has an aggressive collection tactic known as IRS wage withholding to secure back-tax payments. This is also called the IRS wage levy.
If you owe taxes and despite having received Letter 1058 – Notice of End of Intent for Levies and you have not requested a Due Process Collection Hearing within 30 days of the date of Letter 1058, the IRS reserves the right to seize any real or personal property that you own. Personal property includes categories such as money held in your bank account, savings or paycheck. The IRS pay cut is considered a forfeiture of personal property.
If the IRS collects your wages, an Order to Withhold Notice is sent directly to your employer. Wages and salaries include fees, bonuses and commissions. After your employer has received a Withholding Order from the IRS, your employer is required by law to withhold a substantial portion of any paycheck according to notice until your taxes are cleared. If your employer refuses to withhold your wages or refuses to withhold wages, the IRS will hold them personally liable for any shortfalls that should have been withheld from you and remitted to the IRS. released. Levies on your wages will only end when the IRS releases the levy.
The IRS doesn’t take all of your paychecks; they allow you enough to live on – a standard deductible amount and a personal exemption amount based on your filing status and number of dependents. Any court-ordered amounts you owe due to child support are exempt. However, reservations must be made before the collection date.
The IRS uses a formula to determine the percentage of your salary that your employer will withhold and remit to the IRS. The IRS considers your filing status and claim exemptions, and then gives you a set amount to live off of your own paycheck. The remainder of your salary is collected by the IRS through a payroll withholding levy to pay off your tax contributions.
A levy is generally waived by the IRS if (a) you paid off your tax debt (b) the time for collection has lapsed before the levy is serviced (c) the waiver will allow you to pay off your tax debt (d) the levy is causing you financial hardship (e) you enter into an offer in a compromise or installment agreement with the IRS or (f) the fair market value of assets subject to more than your tax liability.
You can appeal IRS action after a levy under the Collection Appeals Program. The IRS usually suspends collection actions during appeals. If your appeal is successful, levy will be released.
Four Ways to Protect Yourself from the IRS Withholding
1. When you offer in compromise are waiting with the IRS.
2. When you have offered to pay your tax dues in a Installment Agreement.
3. You are logged in bankruptcy.
4. Your tax dues are prohibited by statute of limitations.
All of these can protect you from protection if set up correctly. You can do all of these things yourself, but most would agree that it’s easier to hire a professional. Because the IRS can be intimidating, it’s important to know your rights and have someone fight on your side.
