Federal Tax Lien

All About IRS Wage Garnishments

Wage garnishments are used to collect unpaid tax dues. These can be related to child support, unpaid taxes, unpaid court dues, etc. They can be attached to salaries, bank accounts or student loans. A creditor or tax collector can approach the relevant court and obtain a judgment which allows it to attach a wage garnishment.

According to the federal law wage garnishments can claim up to a maximum of 25% of a person's disposable income. There are clear rules set down regarding the extent of a wage garnishment and the exceptions that may be made. These rules are regulated by the federal government.

The wage garnishments are usually served on the employer and the certain percentage is deducted from the person's wages on a continuous basis. If there are several garnishments and the person's net pay is not enough to satisfy all of them then the law lays down a set order for meeting the garnishments. Usually IRS wage garnishments are given the highest priority. In such cases the amount deducted is directly given over to the IRS by the employer.

Anyone who has their wages garnished is afforded protection under the law. Accordingly, an employer cannot dismiss an employee for having a wage garnishment attached to his earnings. Further the person cannot be denied employment because of it nor can disciplinary action be taken against him for this reason.

All states do not have the same regulations regarding wage garnishments. States like Pennsylvania and Texas for example allow garnishments only in certain circumstances. In other states the maximum limit may vary, although it can never be higher than 25%.

In the case of an IRS wage garnishment, a Notice and Demand for Payment is first sent after the tax has been assessed. If the tax payer fails to meet the dues within a certain period, the IRS sends a Final Notice of Intent to Levy. It is only when this too goes unmet that the IRS wage garnishment is started. It is significant however that the federal law only requires the IRS to send the Final Notice. It does not have to ensure that the person actually receives it. Thus some tax payers may actually find out about the IRS wage garnishment when they start facing deductions in their earnings!

The amount of an IRS wage garnishment is influenced by the marital status of the person as well as the number of others who are dependant on him or her. The garnishment remains in force until the full amount of the debt has been paid for.

An IRS wage garnishment can be prevented if immediate action is taken when the first notice is served. A good tax lawyer can help make the best of the situation.