IRS Wage Garnishment

Wage Garnishments & Bank Levies

What are the Different Types of Levies?

There are two different types of IRS levies. First is the 668(W) IRS Wage Garnishment, which is also a IRS Wage Garnishment. The 668(W) IRS levy is used to attach an individuals wages, salary or other income. Other income is that owed to the taxpayer as the result of personal services in a work relationship. The 668(A) IRS levy is used to attach other property or funds that a third party is holding for the delinquent taxpayer. In this IRS levy situation, other property includes bank accounts and business receivables for self employed people.

How Can A Levy Be Served?

An IRS levy can be served either by in person, by mail or even by fax. All forms of service are as equally effective as the others.

Under What Circumstances Will the IRS Release a Wage Garnishment?

The IRS levy will be released if: the delinquent IRS tax is no longer owed; the statutory tax lien collection period has run out; the IRS Wage Garnishment release will facilitate collection of the amount that is owed; the IRS Wage Garnishment is creating an economic hardship whereby the taxpayer cannot cover necessary living expenses; the taxpayer agrees to an IRS installment arrangement.

What Is A Bank IRS Levy Holding Period?

A bank IRS levy holding period is a 21 day period of time prior to when the bank releases the money in the account to the IRS. The reason for the 21 day holding period is to allow taxpayer to make a hardship argument to IRS that may result in a release in some or all of the money that the IRS levy has attached to. After 21 days, if there is no levy release, then the proceeds that were in the bank account at the time the levy was received by the bank will be forwarded to the IRS. All money deposited into the bank account after the levy had been received by the bank will be available for the taxpayer's use and not subject to the IRS levy.

Can My Employer Fire Me Because I Got Levied by the IRS?

No, however in reality it happens all the time and can be very difficult to prove. If an employer fires an employee because of an IRS levy, that employer is subject to a $1000 fine and possibly one year in prison.

Unlike all other IRS levies, an IRS wage levy applies to all future income, commission and dispositions to an employee. An IRS Wage Garnishment will apply to all of your income except the exempt amounts. The IRS Wage Garnishment exemption amounts are so small that no-one could reasonably live off them. Therefore, it is vital to negotiate a release of an IRS wage levy almost immediately. One of the most expeditious ways to release an IRS Wage Garnishment is to negotiate an installment arrangement or to declare bankruptcy.

Will the IRS Levy Retirement Accounts and Retirement Income?

Sometimes Yes, however the IRS must determine that the taxpayer's actions are flagrant in order to merit an IRS levy on retirement accounts and retirement income. Examples of flagrant conduct include the following: taxpayers whose failure to pay is based on frivolous arguments (i.e. that taxes are unconstitutional); taxpayers who continue to make voluntary contributions to retirement accounts while asserting an inability to pay an amount that is owed; taxpayers who contributed to retirement accounts during the time period the taxpayer knew unpaid taxes were accruing; taxpayers convicted of tax evasion for the tax debt; taxpayers assessed with a fraud penalty for the tax debt; taxpayers assisting others in evading tax; taxpayers with liability based on illegal income; taxpayers who are in business and pyramiding unpaid trust fund taxes; taxpayers who have been assessed more than one civil penalty for more than one business organization; taxpayers who have placed assets outside of the country beyond the IRS's jurisdiction; taxpayers who have been assessed jeopardy or termination assessments.

If I Discharged My Tax Liability in Bankruptcy Court, Can the IRS Still Levy My Retirement Account?

Sometimes. Only if the IRS had filed a lien in the county of proper jurisdiction can they levy a retirement account after a bankruptcy filing. If no IRS lien was properly filed, the retirement account that survived the bankruptcy cannot be levied by the IRS.

How can IRS TaxMasters Resolution System Help?

If a taxpayer is subject to an existing IRS Wage Garnishment or seizure, we generally recommend the following: Contact the IRS, file hardship forms (if applicable) and file one or more appeals (if applicable). Communication with the appropriate people at the IRS is vital in releasing an IRS Wage Garnishment or IRS seizure. At IRS TaxMasters, our tax attorneys will assist you in properly completing and filing the necessary forms to ensure contact with the most beneficial collection division at the IRS so that an IRS Wage Garnishment or seizure can be released.

What are the Common Problems Associated with Levy Releases?

The most common problem associated with levy releases are timing. Once the IRS has levied a taxpayer's bank account, that taxpayer has only 21 days to get the IRS tax levy released. Otherwise, the funds attached by the tax levy will be sent directly to the IRS. With respect to IRS Wage Garnishment, a taxpayer's wages will be levied on the very next pay cycle. As such, immediately releasing or modifying an IRS bank or wage levy is crucial in ensuring that taxpayers can meet their monthly necessary living expenses. The problem in getting an IRS levy quickly released is that the IRS is large and cumbersome organization. It may be hard to find the correct IRS representative to release the levy or wage garnishment. The IRS TaxMasters Resolution System can easily and quickly guide you through this sometimes difficult process.