Thursday, June 23, 2011

IRS Process -- How to Get a Tax Wage Levy Release and Stopped

How To Get An IRS Garnishment

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Emergency IRS Levy Release Team

What is an IRS Wage Garnishment or an IRS Wage Levy?

A wage levy or garnishment is the most common form of forced collections ( IRS Levy) used by the IRS. This is a forced collection. The IRS will contact the taxpayer's current employer and demand that they withhold a percentage of the paycheck to satisfy the tax liability. Employers must listen to the demands of the IRS because if they don't, the employer will be responsible for the tax amounts that they should have withheld from the paycheck. The IRS will continue to garnish or levy your wages, paycheck, Social Security, Social Security Disability (SSDI) until the IRS has collected the tax amount owed plus interest in penalties, the Statute of Limitations has expired or the tax amount is paid or settled.

What Can I Do If the IRS Garnishes My Wages?

If the IRS chooses to play hardball over your outstanding tax debt, your wages, your paycheck, your commissions, your Social Security or Social Security Disability (SSDI) may be garnished (levy). It is very important for you to be aware of your rights and to know your options if the IRS garnishes your wages, as it makes more sense to work out a solution with the IRS rather than allow them to continue taking money from your paycheck.

Advice for Success With Filing Taxes

  1. Do not delay, the longer you wait, the worst penalties can get. IT IS NEVER TO LATE TO FILE A TAX RETURN.
  2. Use an experienced tax professional that can File your delinquent tax returns and  Reduce your back taxes. You will likely end up saving more money by using a tax professional than if you attempted to do everything on your own since they are experts and have handled many situations similar to yours. This is especially important if you do not have enough money to pay the taxes owed. The IRS always tries to make individuals feel that they must pay at all costs when this is not the case at all and you can find a settlement method that is right for you.
Back to the IRS Levy

One of the harshest ways for the IRS to punish delinquent taxpayers is to garnish (levy) their wages, their paycheck, their Social Security, their Social Security Disability (SSDI) or their bank accounts. It is a popular misconception that the IRS can seize only your assets - financial accounts, real estate, automobile, etc.; however, the IRS retains the authority to take money out of each one of your paychecks until your debt has been paid in full.
Here are some recommended steps to follow if the IRS has garnished your wages:
  1. FILE YOUR BACK TAXES: By law, the IRS cannot get rid of a levy if there are missing tax returns. For this reason, you need to be 100 percent sure that all of your returns have been filed and are in the possession of the IRS.

  2. DETERMINE HOW MUCH YOU OWE: Finding out how much you owe the IRS can be scary but simply cannot be avoided. This goes hand-in-hand with step number one: you won't know how much you owe until every one of your tax return has been filed.

  3. OPTIONS: Once your tax debt has been paid off, the IRS will stop garnishing your wages. There are a number of different ways to pay back taxes, including paying your tax liability in full, setting up an installment agreement with the IRS or submitting an offer in compromise. If you can prove yourself eligible, you may also want to consider requesting to be placed under "currently not collectible" status. If the IRS agrees with your plea, they will immediately release the levy for a time period of between 18 TO 24 months. It is important to keep in mind, though, that this is only a temporary measure.
The law mandates that the IRS send you a final notice prior to garnishing your wages. If you receive a final notice from the IRS then you should act fast, because the longer you wait to take action, the greater the chance of your wages being garnished.

Filing Back Taxes - How to File and What to Know

With the IRS and unfiled back taxes, one good fact is that the IRS has an unwritten policy about not prosecuting people that voluntarily file back taxes. It will be different if the IRS finds you first; the IRS can punish individuals up to 1 year in prison and $10k for every year unfiled. You probably will not go to prison because the US doesn't have enough prisons for all non-filers, but be assured that they will impose much harsher penalties if they find you before you voluntarily file your back taxes. Understand why and how you can file your unpaid IRS taxes below. Taxes can be prepared from decades ago with proper documentation.

Why You Must File Back Taxes, Even If Late

  1. Penalties and Interest will grow significantly and increase the total tax amount you owe the IRS.
  2. If you do not file, the IRS may complete a "Substitute for Return," which is not optimal as it is one tax return for all years. No federal exemptions or expenses will be applied and therefore increase your total tax liability.
  3. If your tax liability is assessed and the IRS completes a substitute for return (SFR) for you, they will begin collecting. This means they can place a tax levy and take your wages, paycheck, commissions, Social Security, Social Security Disability (SSDI) or bank accounts, or file a federal tax lien on your personal personal property. 
  4. The IRS will eventually find you. They have a complex computerized system (Automated Collection System / ACS) that works slowly, but efficiently. 
  5. Even if the IRS has completed a Substitute for Return (SFR) for you, it is in your best interest to file your back taxes because generally they will adjust your balance downward. It has been our experience at Flat Fee Tax Service that we have been able to adjust, on average, the tax liability to half of the original SFR assessment. Realize that you cannot receive a car loan or mortgage with unfiled tax returns if there is a balance owed. Social Security and other benefits can be removed as well. The consequences of filing voluntarily and not being able to pay are much less than if the IRS finds you first. Even if you file voluntarily and late and cannot pay, you may be able to negotiate a settlement with the IRS for less than the amount owed through the Offer in Compromise program. Lastly, piece of mind that you no longer have to hide and will be considered in good standing with the IRS, even if you cannot pay the amount owed, is a reason to file.

    Will the IRS Find You?

    Years ago it was likely that individuals could get away with not filing. Those days are over. The IRS still remains very inefficient, but the IRS continues to update their computer systems every year to increase the efficiency in order to collect as much money as they can. The computer systems are good enough now that individuals cannot hope the IRS just doesn't realize they didn't file. That will not be the case. The IRS inefficiency is shown by the slow response time to non-filers. Many non-filers think that they got away with not filing because they are not contacted within a year or two, but this is pretty normal, the time lag is usually about 1-2 years before they start making contact for the unfiled return. Don't forget that penalties and interest during the 1-2 years builds up.
    The IRS has a computer system called Information Returns Program (IRP). The IRP matches W-2 wage statements and 1099 income reports from the payers (employers). They match this information against the tax returns that people file. When the computer fails to find a return to match with the 1099 report this will make the computer automatically start a Taxpayer Delinquency Investigation. The computer will begin submitting computer generated notices to your last known address and if no response is made then an IRS employee will begin trying to make contact.

    When the IRS Finds You

    The IRS will begin by contacting you in one of a few ways. Depending on how they contact you can tell you how serious the IRS is taking your case. You can either be targeted as a criminal non filer or a non criminal non filer. Obviously it is better to be a "non criminal" non filer.
    When you are not being considered a criminal non-filer, the IRS will contact you by letter or telephone requesting that you file unfiled returns within a 30 day period of their request. You may also be visited by an IRS agent, that will request that you file the returns directly with him as soon as your can. The IRS can also file the returns for you, which they can legally do and they WILL NOT give you the benefit of the doubt on anything (deductions). 
    If you are visited by a criminal investigator (the one with the gun, the badge and the handcuffs), the IRS has started up a criminal investigation for your unfiled taxes. This is not common and is likely to happen only if you did not report several hundred thousand dollars of income over a period of a few years. Next to recover the taxes once you file or they file for you, you could be levied or have property or money seized.

How to Stop IRS Wage Garnishment: Stop IRS Levy

There are two different methods that can be used to stop an IRS wage garnishment (levy). The first is to resolve your tax problem and the second is to cancel out the effects of the levy. The most ideal method would be to resolve your problem with the IRS. There are only a few cases where it may be difficult to resolve the problem with the IRS and you have to take other measures while you buy time to resolve your problem.

Resolving your Tax Problems to Stop the Wage Garnishment (Levy)

In order to resolve your tax problem you must get back into good standing with the IRS. In order to get back into good standing you must either pay the IRS the taxes that are owed or come to some other form of agreement to pay the taxes back over time. Below are the common method used to pay or settle taxes:
  • PAY THE IRS IN FULL- This might sound like the most obvious method. Most likely if your are reading this article, you do not have the ability to pay off your tax liability in full or even through a payment plan. You do have options. Finding some other way to pay the IRS in full can be a good option especially because if you don't, the IRS may take money form you that you need for your required bills to live.
  • ENTER INTO AN IRS INSTALLMENT AGREEMENT- If you enter into an installment agreement with the IRS and have the agreement accepted, the IRS will stop the levy. With an installment agreement the IRS will allow you to pay back the taxes you owe in monthly increments until they are fully paid off as long as you can keep up on the monthly amounts and you can pay off the entire amount in a period less than 3 years.
  • FILE AN OFFER in COMPROMISE- An IRS settlement through the Offer in Compromise program is a method that allows a taxpayer to settle their taxes for less than the total amount owed. The IRS has recently expanded and eased the requirements for an Offer in Compromise. The IRS is selective regarding who qualifies for this settlement program. People who are being faced with bank levies or wage garnishments tend to qualify for these types of agreements. If you want to consider this form of settlement it is a good idea to talk with an offer in compromise professional to see if you will qualify. Once you file for an offer in compromise it will stop collection actions while your case is reviewed for acceptance.
  • HIRE A WAGE GARNISHMENT PROFESSIONAL- When dealing with IRS wage garnishment (levy) it is highly suggested that you seek professional with extensive experience with the IRS Collections Division to help stop the garnishment. A tax professional can quickly analyze your financial and tax situation and find the best method you can use to resolve your tax problem. They may use a combination of tactics in order to stop the levy depending on your situation. The IRS likes working with professionals in these types of situations and is more likely to give a professional a more favorable deal than an ordinary taxpayer.
If you cannot or refuse to resolve your tax problems using any of the above then you can consider the following methods in order to temporarily stop the levy or cancel out the effects of the levy.
  • BECOME CURRENTLY not COLLECTIBLE- The one thing to note about the IRS is that they do not want to collect from individuals if it were to leave them without enough money to feed their family or put a roof over their head but will continue their collection mechanisms even if this were the case unless it is proven to them. Many times collections can be temporarily paused for months and up to years if a taxpayer can prove that their financial situation is bad enough that it would be unfair for the IRS to collect. A tax professional can expedite this for you.
  • CHANGE EMPLOYERS - Do you like your job? If not and do not care about where you work or who you work for, this may be an option. If you change employers this will slow the IRS down. Once you leave your current job the IRS will not have any more funds to seize. Once you find another job the IRS will have to track down the new employer and reissue an IRS wage levy with that employer which may take up to a few months. This is an option only if you are trying to buy time and we do not recommend it. At some point in time, you need to settle down and have a life.
  • TEMPORARILY QUIT - If you have a trusting employer that will allow you to temporarily quit your job then this can slow down the IRS as well. If you quit and are taken off the books then the wage levy ends. Once you get hired back on again the IRS will take some time to figure out what happened and will have to reissue the levy again. This can buy several months of time in order for you to settle your taxes in another manner. This may also put your employer at risk. Once again, we do not recommend this option.
  • FILE FOR BANKRUPTCY- Filing for bankruptcy will stop a wage garnishment (levy). While this is not a suggested method, it will stop the levy temporarily and possibly for good. Sometimes bankruptcy does not settle tax debts and the IRS can take collection actions after the bankruptcy is through. It is a good idea to look at other tax settlement methods before considering bankruptcy. If you are a candidate for bankruptcy then it is quite possible that you may qualify for the offer in compromise program. Check with both an experienced Bankruptcy Attorney and a tax professional. Weigh your options.
  • APPEAL THE TAX LEVY - If you don't agree with the levy that has been filed it is your right to appeal it. Even if you didn't appeal within the 30 days that your notice of intent to levy mentioned, you can still appeal the levy.
A Wage Garnishment (Levy) is not something that should be taken lightly. If you don't take action the IRS will continue to garnish your wages until they have collected enough money in order to pay for the entire tax amount owed plus penalties and interest. If you are like most people and can't afford to have the IRS do this it is important to take action. The IRS can be stopped and an agreement can be made where it will be reasonable for even the taxpayer in the toughest financial situation.

I am Dave Rosa, the V. P. of Client relations at Flat Fee Tax Service, Inc. I will be conducting your confidential consultation. It is my duty to you, as well as Flat Fee Tax Service, Inc., to provide you with an honest and straightforward evaluation of your IRS problem. We do not employ salesmen. There is no pressure on you. We strive to keep our costs as low as possible so that we may pass these savings on to our clients. We have are a positive benefit to our clients.
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1 comment:

  1. What are your options when being faced with an IRS garnishment / levy. What are your options. What can you do? This article will tell you.