Did you know that if the IRS issues a wage garnishment on your current employment they could leave you with as little as $199 per week! When your employer receives Notice of Levy from the IRS, it comes with IRS Publication 1494. Pub 1494 is a chart that instructs your employer on how to calculate the amount of your check to seize per pay period and remit to the IRS.
Publication 1494 determines your garnishment based on the following information:
1. Your Filing Status;
2. How often you are paid; and,
3. How many exemptions you are entitled to claim.
Therefore, someone who is single, paid weekly with no dependents would be entitled to no more than $199 per period whereas someone who was married with 2 dependents would be entitled to $533 per check. Either way, the IRS has no compassion when it comes to effectuating IRS wage garnishments. As you can see, the implementation of a wage garnishment is completely calculation based and clearly creates financial hardships for most immediately.
Normally when an employer receives a notice of levy to garnish your paycheck from the IRS, they should provide a copy of the notice to you. The notice of levy will indicate the type, years, and amounts that the IRS claims are owed. Many employers will not implement the levy for 1 pay period in an attempt to give their employee an opportunity to get an IRS levy release to them. An IRS levy release is issued by the IRS and sent to the employer directing them not implement the levy. This release can be in full or partial.
Requirements for Levy Release:
1. The IRS will not consider a levy release if you are not compliant. This means that all past tax returns must be filed. If you have not done so, you will be required to fax any unfiled returns to the IRS before they will discuss a possible levy release;
2. You will be required to negotiate an IRS Installment Agreement. If the balance owed is less than $25,000, the IRS will usually accept an offer of a monthly payment that will pay off the balance in 60 months. For example, if you owe $15,000, the IRS should allow a monthly payment of roughly $250. If the balance due is above $25,000 and below $50,000, the IRS will usually allow a monthly payment that can repay the balance in 72 months as long as you agree to have your payment directly debited from a financial institution.
If an installment agreement is established, the IRS agent should be willing to fax the IRS levy release to your employer. You should have your HR or payroll departments fax number available as you will be required to provide. If you do not, the IRS agent will mail the levy release to your employer and until your employer receives, the levy will stand.
If you cannot afford an installment agreement, then you might qualify for a reduced installment agreement or a temporary uncollectible status. In order for this to be determined, the IRS will require that you present your financials to them. The IRS has a form 433F that can be completed and presented via phone. It is important to note that many of the expenses that we all pay, may not be expenses that the IRS deems acceptable in determining an inability to repay. Essentially, the IRS has created “allowable” expense categories and limits on them as well. Therefore it is very important to understand the allowable expenses and limits as all too often taxpayers present their financials to be told they can actually afford more then had they not presented their financials. Some expenses that will not be allowed are the cost of private school for your children, higher education cost for your children, repayment of your child’s student loans, more than 1 vehicle payment up to $517 per taxpayer who owes the tax liability, and, whole life insurance payments. Additionally, there are maximum allowed expenses amounts for housing and utilities, operating expense for vehicles, and for food and the like.
If you feel that your financials warrant the inability to establish an installment agreement you may want to contact ResolveTax.com at 800-721-3890. Resolve Tax offers a free financial analysis to determine if this may be the case. There is even the possibility that your financials will warrant tax settlement whereby I can reduce your total tax repayment to pennies on the dollar. Why not let Resolve Tax determine if IRS tax relief is an option for you?