ANSWERS: 1
  • The Internal Revenue Service has several methods used to enforce the payment of back taxes. The method of last resort is an IRS levy. A levy allows the IRS to seize a taxpayer's assets, which could include a taxpayer's home, car, bank account or wages.

    Purpose

    The purpose of a wage garnishment is to seize a portion of a taxpayer's income so that the income may be applied to back taxes. Wage garnishments are usually capped at 25 percent of a taxpayer's normal income.

    Calculation

    The IRS bases the actual dollar amount it will deduct from your wages on a formula developed by the IRS. The formula takes into account the taxpayer's income, living expenses and number of dependents.

    Process

    The IRS must send the taxpayer an Intent to Levy Notice before garnishing their wages. The notice will request payment in full and provide the taxpayer with the amount due. If payment is not made in full within 10 days or arrangements to pay are not made, the IRS will garnish the taxpayer's wages.

    Considerations

    Keep in mind that the IRS can also levy your bank account, in which case there is no limit on the amount of funds the IRS may seize.

    Exceptions

    Taxpayers who are experiencing an economic hardship, such as foreclosure or eviction, may be able to prevent wage garnishment by contacting the Taxpayer Advocate Service.

    Source:

    Internal Revenue Service: Levy

    Internal Revenue Manual: Levy on Wages, Salary,and Other Income

    Taxpayer Advocate Service

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