If the Internal Revenue Service (IRS) has started garnishing your wages, it can put you in a difficult financial situation. Suddenly, you can no longer rely on your entire paycheck to cover your basic expenses. When the IRS garnishes your wages, it can be very stressful, and the agency may take additional steps to collect the debt. It’s important to know how to stop IRS wage garnishment and resolve your tax debt quickly.
Why Is the IRS Garnishing My Wages?
The IRS garnishes your wages if you owe the agency tax debt and you have not paid. Wage garnishment is one type of collection action the agency can take to recover the payment it’s owed.
There are many ways you can end up with tax debt. You may have filed your tax return late, which may result in penalties for failure to file or failure to pay. Your return may have included inaccurate information, leading to information return or accuracy-related penalties. If you don’t pay these penalties or take other steps to abate them, they accrue interest.
Over time, your debt can grow considerably. This is especially true if you are also behind on paying your taxes. Eventually, the IRS will take steps to recover the debt you owe.
What Is Wage Garnishment?
Wage garnishment is one type of levy in which the IRS seizes your funds. In 2024, the IRS issued nearly 313,800 notices of levies to third parties, which include bank levies, wage levies, and more. Third parties can include banks, employers, and other financial institutions. The agency can contact your employer and require them to deduct a specific amount from your paycheck and send it directly to the IRS to cover your debt.
Wage garnishment can affect many types of income, including:
- Hourly wages
- Salary wages
- Pension payments
- Bonuses and benefits
- Commissions
- Accounts receivable
- Governmental benefits
Even after garnishing your wages, the IRS might take other collection actions, especially if you owe a substantial debt. This is why it’s crucial that you act to address the garnishment. Wage garnishment by the IRS often results in severe financial hardship.
When Does the IRS Garnish My Wages?
If you owe debt, your wages will not be garnished immediately. The agency will attempt to contact you and request payment through tax bills and notices of its intent to levy your wages. You will first receive notices like:
- A Notice and Demand for Payment
- A Final Notice of Intent to Levy
- A Notice of Your Right to a Hearing
- An advanced notification ofthe Third Party Contact
If you do nothing or refuse to pay the tax after the first notice, then the other steps will be taken. If you continue to ignore the IRS, your wages can be garnished 30 days after the Final Notice of Intent to Levy. Other creditors have to get court approval to garnish your wages, but the IRS does not.
What Can You Do to Stop Wage Garnishment?
To release a levy and stop wage garnishment, there are several options. Ideally, you should act to address your debt as soon as you receive your first notice of nonpayment by the IRS. However, you can still stop garnishment even after the IRS begins taking money from your paycheck. The IRS must stop garnishment if any of the following is proven:
- You paid your full tax debt
- The collection period on the tax debt ended before the garnishment order
- You can more easily pay your taxes if the levy is released
- You began a payment plan with the IRS, and the plan requires the end of the garnishment
- The garnishment creates an economic hardship, and you cannot meet your reasonable living expenses
If the garnishment is causing you financial hardship, get in touch with the IRS immediately to pause the garnishment. However, stopping garnishment does not mean the debt is forgiven. Your options for stopping wage garnishment and resolving your tax debt include:
- Paying the debt: The IRS must stop garnishment if you pay the debt, and this will resolve your full tax liability.
- Negotiating the garnishment: You may be able to negotiate with the IRS to lower how much is garnished from your wages, limiting the financial impact of the collection while also paying back your debt.
- Negotiating your tax debt: The IRS is open to negotiation if you can’t financially pay back your full debt. In 2024, the IRS helped over 62 million taxpayers, including over 2 million taxpayers who contacted Taxpayer Assistance Centers. You can negotiate with the IRS to lower your debt or resolve it through other methods. A payment plan lets you repay the debt over time, while penalty abatement can reduce how much you owe and make it easier to pay the full amount. An offer in compromise can resolve your entire debt by paying the IRS an amount the agency accepts.
- Filing for bankruptcy: Bankruptcy can sometimes stop wage garnishment from some creditors. Additionally, resolving other types of debt through bankruptcy can make it easier to pay back the IRS. However, this process has drawbacks, so always get legal advice.
FAQs About How to Stop IRS Wage Garnishment Immediately
Can You Stop an IRS Garnishment Once It Starts?
Yes, you could stop an IRS garnishment once it starts. The most effective and immediate way to stop wage garnishment by the IRS is to pay the agency the tax debt you owe in full. If you can do this, you should. If you do not have the financial ability to pay the debt, there could be other options. You can negotiate the garnishment to a lesser amount or negotiate your tax debt through alternate debt settlement options.
How Can You Get Out of IRS Wage Garnishment?
If you can’t pay the full debt, you may be able to get out of IRS wage garnishment by negotiating the garnishment or the debt you owe. You could negotiate the garnishment to a lesser amount. When you negotiate the tax debt, you could apply for an installment agreement, have the debt marked as Currently Not Collectible, or apply for an offer in compromise. When you hire a wage garnishment lawyer, they can help you look at your options.
What Is the IRS One-Time Forgiveness?
IRS one-time forgiveness is another term for first-time penalty abatement. It does not forgive your principal IRS tax debt, but it can clear specific penalties, such as failure to file or failure to pay, and any interest that has accrued on those penalties. Under first-time abatement, you only need a good history of tax compliance.
Can the IRS Reverse a Garnishment?
The IRS could reverse a garnishment if the garnishment is causing you economic hardship or if you pay the debt you owe in full. A reversal of a wage garnishment does not mean you will get back the income removed from your paycheck, as that money goes to cover your tax debt. Even if you negotiate your debt with the IRS or pause garnishment due to economic hardship, you are still responsible for the debt and are expected to pay.
Hire a Wage Garnishment Lawyer at TaxSmith, LLC
When you face the potential of an IRS wage garnishment, you need the help of an experienced tax law attorney. At TaxSmith, LLC, we have over a decade of experience in cases like this. Our attorneys provide compassionate and transparent legal advice in these complicated and frustrating cases. We can assess your options for resolving your tax debt and avoiding financial hardship. Reach out to our firm today.
