Wage garnishment is a collection tool used by the IRS to seize a portion of a taxpayer’s wages directly from their employer to satisfy an unpaid tax debt. When the IRS garnishes wages, they issue a Notice of Levy to the taxpayer’s employer, requiring them to withhold a portion of the taxpayer’s paycheck and send it directly to the IRS.
Wage garnishment typically occurs after the IRS has sent multiple notices, such as CP14 or CP504, and the taxpayer has failed to respond or resolve the outstanding tax debt. The amount garnished is based on IRS tables that allow the taxpayer to retain a minimum amount for basic living expenses.
Wage garnishment continues until the full tax debt, including interest and penalties, is paid off, or the taxpayer takes action to stop the garnishment by:
- Paying the full amount owed.
- Entering into an Installment Agreement or submitting an Offer in Compromise.
- Requesting a Collection Due Process (CDP) hearing.
Stopping a wage garnishment quickly is crucial, as it can have a significant impact on the taxpayer’s ability to meet their financial obligations.