When an individual fails to pay his or her taxes, the Internal Revenue Service (IRS) has the authority to collect taxes, penalties, and interest by garnishing the individual’s wages. Typically, creditors are required to get a judgment before they can garnish wages, but the IRS does not need to meet this requirement. Furthermore, the IRS is often authorized to garnish a much greater amount of a person’s wages than other creditors can take. The best way to avoid wage garnishment is to prevent collection actions in the first place. However, this is not always possible. Fortunately, there are still actions you can take that may be able to stop wage garnishment.
Responding to a Collection Due Process Notice
When tax debt goes unpaid, the IRS may issue you a Collection Due Process notice. This notice is to inform you that your future wages will be intercepted for the purpose of debt repayment. You then have 30 days to request a hearing and formally respond to the notice. The most common ways to prevent IRS collection actions such as wage garnishment include:
- Disputing the tax via a tax controversy defense: These defenses may include expiration of statute of limitations or innocent spouse relief. It should be noted that if you have previously been given the opportunity to appeal the amount due and did not, you may not be able to dispute the tax debt.
- Claiming an economic hardship: If the wage garnishment will create a significant economic hardship, you may be able to stop the wage levy.
- Agreeing to participate in an Offer in Compromise (OIC) or installment plan: An OIC allows an individual to settle a tax debt by paying a lump sum, which is less than the total amount of taxes owed.
- Filing for bankruptcy: You will need to meet certain criteria to have tax debt cleared in bankruptcy. Although filing for bankruptcy cannot always prevent wage garnishment permanently, it may be able to provide temporary relief.
Contact a San Jose, California Tax Penalty Abatement Attorney
Wage garnishment can have a huge effect on your finances. If you have outstanding tax debt and are worried that the IRS will take collection actions against you, contact a San Francisco Bay Area tax lawyer for help. Call John D. Teter Law Offices today at 408-866-1810 to schedule a confidential consultation. We can help you explore your legal options and choose the course of action that gives you the greatest chance of avoiding wage garnishment.