Are Your Wages Being Garnished? You May Qualify for IRS Debt Forgiveness

November 1, 2021

Unlike private lenders, the IRS has almost unlimited power to gain access to the money you owe them. Aside from seizing your assets and the money already in your bank account, they can also garnish your wages. This means that what your employer pays you will no longer come directly to you, but instead, the bank will be instructed to send it to the IRS, instead. Fortunately, the IRS debt forgiveness program can offer some relief.

A significant amount of tax debt can cripple your financial future, especially as the interest on the money compounds daily. The IRS knows that not everyone will be able to pay the full balance, so they have set up a system that can help you. There are several different options, and they cater to different types of people and situations. A tax resolution specialist will be able to help you decide which one is most suitable for you.

Can the IRS Garnish Your Wages?

Wage garnishment sounds like an extreme measure, but it is a legal process that the IRS employs to access your funds. When this happens to you, they will take a certain proportion of your income every month. You will be allowed to keep an exempt amount, which depends on how many dependents you have and what your income is. If you receive any bonuses, they are likely to go to the IRS in full.

There are only a few ways to get out of this situation. Naturally, it will end as soon as you’ve paid off your entire tax debt. However, this could take many months, and you could face financial hardship in the meantime. You can make an alternative arrangement, such as an installment agreement, with the IRS, or you can let them know that you are not able to pay the entire amount. If your offer or application is accepted, the garnishment will stop.

What Can You Do? 

Debt forgiveness comes in several different forms, and you may be able to access some but not all of them. The easiest way out of your situation will be to set up an installment agreement, which means that you’ll pay off your entire tax debt, but over a longer period of time. If this isn’t an option for you, ask your tax resolution specialist about some of the other measures, such as an offer in compromise or “Currently not collectible” status.

They can help you access the more comprehensive types of forgiveness, so you can pay less than you originally owe or even stop paying your debt altogether. What’s more, you might not be responsible if the mistake wasn’t your fault but your spouse’s, and you didn’t know about it. Let’s have a look at some of the options and how they could help you out.

Set Up an Installment Agreement 

To stop wage garnishment quickly, you could set up an installment agreement with the IRS. In essence, this allows you to pay off your debt at your own pace. However, you’ll still owe the full amount, so you have to work hard to come up with the money. This option could be great for someone who has a steady and reasonably high income and is willing to make a sacrifice for a clean slate.

To get started, you should speak to your tax specialist. They can help you figure out how much money you have coming in and going out each month and then draw up a budget from there. Remember, the aim is to pay off your debt as quickly as possible, but not to create hardship or an impossible situation for your family. As soon as the IRS accepts the agreement, the wage garnishment will stop, and you can pay at your own, predetermined, pace.

Make an Offer in Compromise

If your income has been reduced significantly or you are facing unexpected extra expenses such as medical bills, it can be extremely difficult for you to come up with the money necessary to pay off the entire debt. In this case, you could send the IRS an offer in compromise. Again, the wage garnishment process will halt once this is accepted.

Unlike an installment agreement, this type of IRS debt forgiveness does not involve paying off the whole balance. Instead, both you and the IRS decide to compromise and meet each other halfway. You will pay as much as you can, and they will forgive the rest. Keep in mind that it’s hard to qualify for this option, and you’ll have to prove that there is no way for you to come up with the full payment.

Gain Currently Not Collectible Status

For people with the most precarious financial situation, “Currently not collectible” status is the best option. You should go for this if your income is lower or equal to your basic expenses. In such a situation, there is nothing left over at the end of the month, and you have no realistic way to make extra payments to the IRS. Wage garnishment can be detrimental to your finances in this case, and your specialist should help you to stop it as soon as possible.

Make Sure You’re Not Blamed for Your Spouse’s Mistakes 

Married couples are often jointly responsible for their taxes, and this can be an issue if your spouse has been dishonest about their income or expenses. You may be liable for tax or penalties related to an issue you had nothing to do with and didn’t previously know about. Luckily, there is a way out of this predicament.

If you genuinely weren’t aware of your spouse’s problem with the IRS, you can claim innocent spouse relief. Under this program, you are no longer held responsible for paying the tax debt, and you can move on with your life without facing any punishments or fines.

How Can You Access IRS Debt Forgiveness? 

The various debt forgiveness programs are there to protect you and make sure you can pay off a part or all of your debt in a way that doesn’t cause hardship to your household. However, it can be challenging to access them, particularly if you don’t have a lot of experience in dealing with the IRS. A great tax resolution specialist will sit down with you and talk to you about the issue. The best way to start is to reach out and ask for an initial consultation.

If you’re in a lot of tax debt, you may not see a way out of your situation. This is particularly true because the IRS has so many legal ways of accessing the money you owe them. In fact, they can even garnish your wages, so you won’t receive the money your employer pays you. Such an action can cause you further issues with other lenders, as you’ll have no way of keeping up with your mortgage and bills. 

The IRS debt forgiveness program can help you to restart with a clean slate. There are a number of different options, and each of them can lighten the burden in a different way. In general, the more comprehensive the forgiveness, the harder it is to access, so you’ll need a good tax resolution specialist to help you fight for your rights. Contact us today at Geaux Tax Resolution to book your initial consultation with one of our professionals.