| If you do not pay your taxes, IRS has an authority to | | | | on it, the situation can slip out of your hands. There is |
| collect these taxes out of your wages. It is called | | | | a 21 day period available to you. |
| wage garnishment. If this garnishment is filed, your | | | | 2. If you need to make an appointment with the IRS in |
| employer is required to collect and pay back a large | | | | order to enter into an agreement for the payment of |
| portion of money from your paycheck to IRS. The | | | | taxes. It is certainly the better course of action |
| garnishment continues until the total tax is paid or IRS | | | | instead of getting intimation from your employer that |
| releases the garnishment in response to an agreement. | | | | he needs to withhold money from your wages. Also, |
| Usually The Garnishment occurs due to the following | | | | your financial burden may be more if you do not enter |
| reasons – | | | | into an agreement and IRS approaches your employer. |
| 1. If IRS has assessed the tax and has sent to the | | | | 3. You should preferably approach a tax consultant so |
| taxpayer a demand for payment. | | | | that you can negotiate with the IRS and make an |
| 2. If a taxpayer has ignored or refused to accept the | | | | agreement for the settlement of dues. You may be |
| tax liability. | | | | able to set up a plan for repayment or give an offer |
| 3. If IRS has informed the taxpayer with a final notice | | | | for a compromise settlement. |
| of intent to garnish at least 30 days before such | | | | 4. Try to avoid actions which are considered flagrant. |
| action. | | | | You cannot continue making contributions to your |
| There is no standard formula with the IRS about how | | | | retirement accounts while claiming to IRS your inability |
| much it should garnish. The amount can vary from | | | | to pay. In this situation IRS can levy your retirement |
| 30 per cent to 70 per cent of your paycheck. IRS | | | | accounts. If your tax liability is based on illegal income |
| sends a notice to the employer of the taxpayer to | | | | or if you are accessed with a fraud penalty or if you |
| withhold a specific amount out of the wages of the | | | | have placed assets outside the United States and |
| taxpayer in order to send it directly to IRS. There is | | | | they are beyond the jurisdiction of IRS, then IRS can |
| no choice for the employer to refuse such order from | | | | proceed to levy your retirement accounts and |
| IRS. The refusing employer is personally liable for the | | | | retirement income. |
| money which was not received by IRS. The | | | | Your employer cannot fire you just because you have |
| garnishment is made in a particular order. Firstly | | | | got garnishment from IRS. If any employer does so, |
| money for federal tax is garnished, then the local | | | | he is subject to a fine of $1000 and one year |
| taxes are garnished and then the other dues by credit | | | | imprisonment. |
| card companies etc. are garnished. The garnishment | | | | IRS wage garnishment applies to all the future income |
| continues until the total tax due is paid or an alternative | | | | and the amount remaining in your hands after the |
| arrangement is made to pay. | | | | garnishment is so small that it is impossible to live with |
| Wage garnishment can be avoided in the following | | | | that. The ideal solution to avoid wage garnishment is |
| manner – | | | | to pay your taxes on time and in full. However, |
| 1. You need to contact IRS very quickly on receiving | | | | should you face wage garnishment, handle the situation |
| the notice of levy letter. If you ignore the notice or sit | | | | quickly and do not panic. |