Like most creditors, the Internal Revenue Service (IRS) has the power to garnish your wages if you have a tax debt. However, unlike most other creditors, the IRS can garnish your wages without first obtaining a judgment, and generally the amount you can collect is higher than what regular creditors can receive. When you owe money from your federal taxes, one of the most common collection measures taken is a garnishment of taxes, usually on your salary or salary. Wage garnishment can leave a person with too little money to live on.
If you don't follow the procedures required by your state, the court creditor is likely to receive a larger amount of your salary than the creditor is entitled to receive by law. However, the good news is that the IRS wage garnishment will be suspended while your application is reviewed. Ideally, you should write a check to the IRS for the full amount due when you submit your return or process payment online. If you don't meet the demand for payment within the established time frame, the IRS will study the most effective way to force you to pay the tax.
Other types of legal or equitable garnishment procedures include taxes from the IRS or state tax collection agencies for unpaid taxes and administrative embargoes by federal agencies for non-tax debts owed to the federal government. In addition to garnishing your salary, the IRS can tax your bank accounts, Social Security income, and accounts receivable. This is why many people find themselves in serious financial difficulty after the IRS enacts a wage garnishment. Title III of the CCPA (Title III) limits the amount of a person's earnings that can be garnished and protects the employee from being fired if the payment of a single debt is garnished.
In determining whether certain lump-sum payments are income under the CCPA, the central question is whether the employer paid the amount in question for the employee's services. However, unlike most other creditors, you don't have to sue you first and get a judgment to begin the garnishment process. When the IRS issues a tax, it will send a notification to your employer (IRS Form 668-W) requiring the company to send part of your paycheck to the IRS. When the IRS is taking or is about to withdraw large portions of your check to pay your tax bill, it's important to act quickly.
The amount of the payment subject to garnishment is based on the employee's “disposable” income, which is the income remaining after making the legally required deductions. For employees who receive tips, the cash wage paid directly by the employer and the amount of any tip credit requested by the employer under federal or state law are income for the purposes of the garnishment law. Fortunately, the IRS has many options for you to pay your tax debts to avoid garnishment. In some cases, the IRS may omit the CDP notification and resort directly to a tax after the notification of intent.
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