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TaxLane, LLC
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Pittsburgh, PA 15237


Wage Garnishment Removal

There are a variety of different strategies that can be taken when dealing with wage garnishment (also known as an IRS wage levy) but they all have one thing in common – time. 

You must act promptly to protect your rights, whether it involves appealing the imposition of the levy or attempting to avoid it in the first place. An IRS levy is often preceded by multiple IRS attempts to collect the back taxes owed, including numerous demands for payments, and possibly – liens. You often have a limited amount of time to act with respect to a levy and if you miss the deadlines, the levy can become much more difficult to resolve. 

There are rules that the IRS must follow to initiate a wage levy, but once it is in place, it can take a huge chunk out of your regular paycheck. Protecting your wages from IRS levy and getting an IRS levy removed once it has been established can be difficult tasks. We routinely work with individuals to help them resolve their levy issues and get back on track with the IRS.

What is Wage Garnishment?

Most people have probably heard of wage garnishment to pay off an outstanding debt. Garnishing is a process by which creditors can retrieve the money owed to them through wages, bank accounts, or assets. In most cases, a court order is required before a garnishment can take place, with the exception of child support, tax debt, and student loans. However, in every case, you must be legally notified beforehand.

Garnishment is usually the last resort when creditors try to collect a debt. They typically go through other avenues first such as getting in contact with the debtor, turning over the debt to a collection agency, or offering a settlement. When the debtor is unable to make regular payments or decides to completely ignore the debt, garnishment can occur. In some cases, a creditor can sue for any unpaid debt. If the court rules in their favor, the court will issue a notice to your employer that details when the garnishment of wages will begin.

In some cases, a court order isn’t required for wage garnishments. Many of these cases involve the IRS. Yet, they are still required to issue official notice before garnishment can begin.

There are two types of wage garnishments:

  • Wage garnishment – The employer takes out a certain amount from your paycheck before it reaches your bank account. This happens until either the debt is completely paid off or a different arrangement is made with the creditor.
  • Non-wage garnishment – Non-wage garnishment utilizes methods other than wages to collect debts. A self-employed person is often subject to this type of garnishment, which typically occurs through bank accounts or rentals. As a small business owner, non-wage garnishment is the most likely method by which the IRS will garnish your wages. 

Know Your Rights

When it comes to the garnishment of wages, you should know your rights as a consumer. The courts can’t leave you in a financial situation where you are forced to pay back your creditors and are unable to pay your bills and meet your most basic needs. Wage garnishments can put people who are already struggling into a much deeper financial hole. 

There are federal and state limits on how much can be taken from your check. Based on your disposable income, a certain percentage of your wages can be garnished. The percentage of your wages that can be garnished also depends on the type of debt you owe:

  • Student loans – If you have defaulted on your student loans, the creditor can garnish up to 15 percent of your disposable income.
  • Child support and alimony – Up to 50 percent of your disposable can be taken if you are supporting another child or spouse that depend on you for support. Otherwise, up to 60 percent of your disposable income can be garnished. Also, if you are more than 12 weeks late in payments, another 5 percent can be taken. 
  • Consumer debt – Credit card debt, medical bills, personal loans, and most other consumer debts require garnishment of 25% of wages or the amount by which your weekly income exceeds 30 times the federal minimum wage (currently $7.25 an hour), whichever is less.

For tax debt, the amount garnished depends on your individual situation. The IRS looks at the number of dependents you have (if any) and your standard deduction amount. The formula for how much can be garnished for tax debts varies from state-to-state.

For non-wage garnishment, up to 100 percent of your commissions are subject to garnishment. Income from rental properties and bank accounts can be garnished as well.

What Are Your Options?

When you have received notice of tax garnishment, it’s wise to contact the IRS immediately to work out an agreement other than garnishment. As a consumer, you not only have the right to know if your wages will be garnished, but you also have the right to other options for paying back your debt.

  • You can set up a reasonable payment plan. The IRS understands the struggles of small businesses. It may be difficult for you to come up with large sums of money at one time. While the installments will come with interest rates, they will keep the IRS from seizing income from rental properties, commissions, or accessing your bank account.
  • The IRS can place your business in uncollectible status. This is a viable option if your business is going through hardship and is unable to afford payments. In this way, the IRS can’t go after any of your properties in order to settle the debt, although your business’ debts are still there.

Lean on a Trusted Expert to Protect Your Business Finances

Once you have been notified of impending wage or non-wage garnishments, you only have a few days to take action. The more time passes, the harder it will be to protect yourself from or object to wage garnishments. Contact us as soon as you receive any correspondence from the IRS or your creditor that indicates an “Intent to Levy”.