What Is Tax Garnishment?

October 6, 2011 by  Filed under: Taxes 

One of the most common reasons you may owe the government is due to additional liability when you file your tax returns each year. You may decide to pay immediately or set up payment arrangements. If you fail to maintain your payment arrangements, the government may place a tax garnishment against you.

Tax debt can often arise from an audit, meaning the IRS may investigate your tax return filing and discover that you owe the government money. Once it is determined that you owe the IRS, you will be notified by mail of your debt. If you decide to ignore the notice and do not resolve your unpaid taxes within 30 days, the next communication you receive from the IRS may be a decision to garnish your wages.

So what is a tax garnishment? The IRS can legally withhold your tax refunds to pay debt you owe the government. There may be other reasons for tax garnishment, like unpaid alimony, child support, and student loan obligations. When you default on these obligations, collection agencies can notify the IRS to have your tax refunds garnished to pay the debt.

Garnishments is a legal method for the government to collect your portion of debt. Typically, you will have little notice of this and it is impossible to stop. This is often the only sure way the government will get to see their money back. The good news is that no other collector can garnish these tax refunds, even if you fail payments on a credit card, a loan or a mortgage.

If you do not qualify for a tax refund, it does not mean that you escaped from the government. The IRS has the right to seize personal property, wages including commissions, SSA benefits, travel advances, as well as any other property. They have the right to garnish up to 25% of your gross wages. You will be notified at least 30 days before the wage levy. You can during this time pay or settle your debt. If not, your employer will receive a notice from the IRS. The garnishment against your wages will continue each pay period until your debt is paid.

If you know that you owe tax debt, it is in your best interest to talk with a tax professional or with the IRS directly. To avoid having your tax refund, wages and other property taken, it is best to work out a payment plan with the IRS. Garnishments, as well as court costs, can be costly to the IRS, so most often, you may be able to compromise a payment plan for your tax debt.

Jenny Miles writes about financial topics such as debt relief, credit management and bankruptcy. Learn more about your options to stop IRS wage garnishment when you visit her blog. If you need unique articles for your site please visit unique finance articles.

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