It is possible to lose your wages to your creditor, depending on the situation, through wage garnishment. Wage garnishment is when your employer withholds a portion of your wage in order to pay off your debt. Owing back taxes to the IRS is one of the reasons why your wages can be put at risk. However, even if your IRS problems result in wage garnishment, there are certain limits that must be respected. A wage garnishment lawyer is best placed to help you protect your rights when facing wage garnishment in Texas or any other place.
Understanding IRS Wage Garnishment Laws In Texas
When you owe money to the IRS, the agency takes action to guarantee payment through IRS levies. One of the methods the IRS relies on is wage garnishment or wage levies. Unlike creditors, the IRS doesn’t require a court order for a wage levy. This means that as long as you owe back taxes, your wages can be at risk. The IRS has strict wage garnishment laws to enforce debt collection on unpaid taxes, no matter whether we talk about Texas or any other state. If a taxpayer voluntarily or involuntarily evades or defaults paying their taxes, the IRS can impose a wage garnishment to ensure the defaulter clears their dues. If you have questions like ‘how much do you have to owe before the IRS garnishes wages?’, or ‘how long does the IRS wait to garnish wages’, or ‘what is a wage garnishment calculator?’, seeking help from IRS wage garnishment attorneys can prove to be beneficial.
How Does the IRS Wage Garnishment Processing Work?
If you are wondering, ‘how do I find out if the IRS is garnishing my wages?’, let it be known that the IRS gives taxpayers enough time and opportunities to honor their obligations before it levies wage garnishment. The IRS first makes all attempts to contact the taxpayer regarding their unpaid dues using all possible channels. If the taxpayer doesn’t respond, the IRS sends a “Notice of Intent to Levy”. If the taxpayer does not respond to the notice, the IRS forwards the notice to the taxpayer’s employer. Once the employer is notified, the taxpayer has two weeks to respond. If the taxpayer fails to respond again, then the garnishment begins.
Does the Employer Have To Notify Employees Of Garnishment?
The answer is yes. As per employer wage garnishment rules, the employers are required to give you a copy of any IRS notification they receive about wage garnishment.
How Much Can the IRS Garnish Your Wages?
While the IRS can garnish your wages, the amount they can deduct towards debt payment varies from person to person. The law places IRS wage garnishment limits on how much your wage can be affected. A lot of factors influence the exact amount of money that the IRS will take. The number of dependents you have, and your standard reduction account, are the main ones.
The IRS will only allow you to keep the amount necessary to cover your family’s basic needs. In some cases, though, the IRS can garnish well over half of your wage. A wage garnishment lawyer can work with you to best handle the situation and represent your best interests.
Other Wage Garnishment
Creditors can also take part in wage garnishment. However, unlike the IRS, creditors require a court order to garnish your wage, unless you owe child support or student loans. Even when a judge rules against you, the law protects you by setting a limit on how much of your wage can be taken by creditors. Your wage can only be garnished by 25% of disposable earnings following mandatory deductions or any excess of 30 times your minimum wage. If you have several debts and therefore several garnishments, protections may vary. A wage garnishment lawyer can help you figure out the best way to handle the situation.
How to Stop Wage Garnishments?
Even after the process of wage garnishment has begun, there might still be some time for redemption. You can enter into a tax payment plan or request the IRS for a delayed collection of taxes. Here are some of the ways you can stop IRS wage garnishment.
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Installment Agreement
You can also stop wage garnishment by entering into an installment agreement and paying your dues through affordable monthly installments. In fact, if you pay the full amount due, you can reduce or even completely get rid of the interest accrued and/or the penalties linked to your unpaid dues.
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Offer in Compromise
If you are unable to pay your taxes in full, you can request the IRS for an Offer In Compromise (OIC). If a taxpayer proves that their financial situation does not allow them to pay the due taxes in full, they may get a partial waiver that allows them to settle their dues by paying less than the actual outstanding amount.
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Currently Non-Collectible Status
If you can prove to the IRS that a wage garnishment will lead to financial hardship, there are chances that the IRS will temporarily stop all its collection activities. You will still be liable to pay the dues at a later date when you are in a position to do so. Read More
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Job Change
If a taxpayer changes their job, the wage garnishment process comes to a halt, which is why some people temporarily quit their job and rejoin after some time. A job change, however, is a temporary solution. Although the IRS takes some time to discover that a taxpayer has rejoined, but as soon as it does, it reinitiates the wage garnishment process.
Preventing Wage Garnishment By Filing Bankruptcy: What You Need To Know
Declaring bankruptcy is one of the solutions to get rid of debt obligations. What you may not know is that it is also a way to stop wage garnishment in Texas and other states. You can also recover your garnished wages by filing bankruptcy. There are, however, certain exceptions to this provision. At the Law Offices of Nick Nemeth we can help you learn more about bankruptcy and how you can use the law to prevent creditors and the IRS from garnishing your wages.
To get you started, let’s learn a bit more about the nexus between wage garnishment and bankruptcy.
Understanding “Automatic Stay”
Automatic stay is an action that takes place when you file for Chapter 7 or 13 Bankruptcy. An automatic stay requires all creditors and collectors to immediately stop any and all the activities they were pursuing to collect debts from you. That said, when an automatic stay takes place, wage garnishment also stops. If any creditor wants to recover their payments, they must first request the court to lift the automatic stay, for which they must submit a valid reason.
Exceptions
Although an automatic stay stops the process of wage garnishment, there are few exceptions to the law. An automatic stay, for instance, cannot stop wages garnished related to domestic support obligations. Wage garnishment for debt obligationssuch as alimony and child support continue even after the automatic stay stops, as the court considers these payments as priority debts.
Wage Garnishment after Bankruptcy Case Ends
An automatic stay ends after a bankruptcy case closes. Your creditors, however, cannot garnish your wages for the debts the court has discharged. If, for instance, the court has discharged your credit card payments, your credit card company cannot garnish your wages even though the automatic stay has come to an end. An automatic stay also comes to an end if the court dismisses your case without offering you a discharge. If this happens, creditors can continue to garnish your wages for outstanding debts.
Recovering Wages Garnished before Bankruptcy
Taxpayers, who meet certain conditions, can even recover wages garnished before they filed bankruptcy. The total garnished wages, for instance, must be more than $600 and have been garnished 90 days before filing bankruptcy. You must also have applied for enough federal exemptions to cover the garnished wages. Speak to a lawyer to learn about other conditions you must meet to recover wages garnished before filing bankruptcy.
Busting 4 Common Myths About Wage Garnishment
Ignoring outstanding IRS debt can not only take the form of bank levies, but if the outstanding amount is not paid in full, the court may also issue a judgment of “wage garnishment”. If you have received multiple notices from the IRS or your bank about an outstanding debt, do not bury your head in the sand, it may lead to your employer being notified of your financial situation, which can be quite embarrassing. The Law Offices of Nick Nemeth can help you deal with such problems. To give you a better understanding of what lies ahead, here we clear up four common myths about wage garnishment.
1. Myth: “An employer can fire an employee for a wage garnishment levy.”
Fact: If your employer has received a first court notice for levying a wage garnishment against you, the law says the employer cannot fire you. However, in the case you have more than one wage garnishment levied against you, your employer has the legal right to terminate your employment.
2. Myth: “The government will leave me with enough money to cover my expenses.”
Fact: The law may limit the Government to deduct 25 percent of your disposable earnings, or the amount by which disposable earnings are greater than 30 times the federal minimum hourly wage. It, however, does not guarantee that they will consider your financial expenses during the wage garnishment process. The only funds exempt from garnishment are federal, state and local taxes, unemployment insurance, state employee retirement system payments, and Social Security payments.
3. Myth: “The government can garnish my wages for only one debt at a time.”
Fact: Do not assume your wage will not be garnished for more than one debt at a time. If you owe money to multiple entities, whether the bank, a creditor, or the IRS, the government can garnish your wages for all of them at the same time. In such a case, where your wage garnishment is meant for more than one debt, your employer can also legally fire you.
4. Myth: “Only child support and back taxes can be collected through garnishment.”
Fact: Though the most common cases of wage garnishment include child support and back taxes to the IRS, the garnishment is not limited to them. Other debts including alimony, student loans, past due court fines, and civil monetary judgments also come under the umbrella of types of debts collected through wage garnishment in Texas.
Bottom line
Your wages can be garnished when you owe back taxes, child support, student loans or other types of debt. When your wages are garnished, your employer withholds your earnings in order to pay back your debts. However, even when your wages are garnished, there are limits on how much they can take. DFW residents should seek help from a Texas wage garnishment lawyer to protect their rights and find the best IRS problem resolution. Nick Nemeth’s tax law attorneys will help you work through all types of tax problems, from wage garnishment to IRS bank levies and release. Schedule a free consultation today at (972) 426-2991.
