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Wage garnishment for tax debt: 4 things to know

Let’s start with this scenario: you’ve got unpaid taxes and the IRS is going after your wages to collect the debt.

This process can be called “garnishment” or it can be called a levy.” Either way, it’s important to inform yourself about the process so you can take action accordingly.

Here are four things to know.

The IRS doesn’t need a court order to garnish wages to collect tax debt.

Normally creditors have to go to court before trying to get at your paycheck. For example, if you have unpaid child support, the other parent could seek a court order to garnish wages.

But the IRS does not need a court order.

There are limits on how much of your paycheck can the IRS take.

Part of your paycheck should be exempt from garnishment. The amount depends on several factors, including your number of personal exemptions.

A federal law, the Consumer Credit Protection Act, limits the amount that the IRS can take. The amount is not supposed to be excessive.

It may be possible to get the lien released to end the garnishment.

Getting the levy (garnishment) released may be possible, if it is causing financial hardship.

This is a good subject to discuss with a knowledgeable tax attorney.

A bankruptcy filing affects wage garnishment.

A bankruptcy filing can stop wage garnishment. Keep in mind, however, that you will still owe the underlying tax debt. A tax attorney can help you evaluate your options and develop a strategy that fits your specific situation.

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