Hiring an Attorney for Wage Garnishment

December 13, 2018

Wage garnishment refers to the process of forcibly taking a portion of someone’s regular earnings.  Garnishment is one way that the IRS or New York State satisfies a tax debt. Garnishment can be used to satisfy all kinds of debts, though.  It can be used by creditors to collect credit card debt, medical debt, student loan debt, and so forth. In most cases, a creditor will need to obtain a court judgment before it can begin the garnishment process.  Unfortunately for taxpayers, that requirement doesn’t apply to the IRS.  Significantly, the IRS can simply start the garnishment process without any court involvement.  In fact, it can do so if a taxpayer simply fails to respond when the IRS demands payment. Since it can act without a judgment, should you owe back taxes, you need to know the wage garnishment process.

In this post, we will discuss the essentials of wage garnishment and then highlight the advantages that can be gained from hiring an attorney in such situations. In fact, hiring an attorney can be very helpful.  Specifically, an attorney can assist in developing a route toward removing the garnishment and resolving back tax debt. A garnishment order is a very serious matter.  It’s, therefore, something which every person should do their absolute best to avoid. Garnishment orders can have a severely negative impact on a person’s lifestyle.  It can also have a, long term, negative effect on their credit report. If a taxpayer ends up with a garnishment, hiring a competent tax attorney to deal with it is highly recommended.

How Much Can Be Garnished?

Unlike garnishment orders from non-IRS creditors, the IRS is not limited by the amount it can take from your earnings, but instead by the amount it is required to leave. With most non-IRS creditors, only 10% to 15% of your earnings can be taken to resolve your debt.  Unlike those situations, however, IRS tax debt garnishments don’t work this way. The tax code lays out rules pertaining to the amount the IRS must leave garnished taxpayers. To make them easier to understand, the IRS has published a table that spells out its garnishment parameters in different scenarios.

Let’s look at an example.  Suppose a taxpayer files as single, is paid on a weekly basis, and claims three dependents.  After imposition of the garnishment, this person will have $470.20 left over. This is true regardless of how much the particular individual makes in gross earnings. The tax code states that taxpayer-debtors need only be left with an amount necessary to cover basic living necessities. This explains why the IRS is able to demand and obtain such large amounts to satisfy back tax debt.

Can You Stop an IRS Wage Garnishment?

Taxpayers can stop wage garnishments, but there are only a few avenues available toward this end. For starters, taxpayers can enter into an installment payment agreement, or IPA, to resolve outstanding tax debt.  This allows the taxpayer to settle their back taxes through monthly installment payments.  Taxpayers can also settle the debt with an offer in compromise, or OIC.  The debt can also be declared as uncollectible due to a taxpayer’s financial hardship. Or, a taxpayer can simply pay the outstanding debt in full and then have the garnishment order released. If performed successfully, each of these methods will result in the permanent removal of the garnishment order.

There are also several other methods taxpayers can use to temporarily remove or hinder the order.  These include changing jobs, or  filing for bankruptcy. If you change jobs, though, the garnishment process will simply begin again.  That typically happens after the IRS figures out the identity of the taxpayer’s new employer. And, since back tax debt is not always dischargeable in bankruptcy, filing bankruptcy is not a guaranteed permanent removal method.  It will, however, allow for temporary relief during the automatic stay period granted when the bankruptcy proceedings are initiated.

Taxpayers may also dispute the validity of the wage garnishment order. If successful, this could also be a way to permanently remove the order. Unfortunately, however, the IRS doesn’t typically make mistakes when issuing such orders.  Accordingly, disputing them is typically are not likely to result in a victory for a taxpayer.

Benefits of Hiring an Attorney

There are many, many benefits to hiring an attorney if you ever find yourself grappling with a garnishment order. A qualified attorney can help walk you through the options for removing the order so that you can get back to receiving your earnings. An attorney can help broker an installment agreement with the IRS, or assist with pursuing an offer-in-compromise. As we’ve discussed before on our blog, OICs are reviewed according to certain criteria, and a competent tax attorney will have a thorough understanding of such criteria and can help you structure your offer. An attorney may also be in a position to recommend bankruptcy or a garnishment dispute depending on the particular facts of a given case. In any event, be sure that you hire an intelligent, ethical attorney with a track record of bringing results to clients.

The attorneys at Mackay, Caswell & Callahan, P.C. fit the above description well and have a tremendous amount of experience dealing with garnishments, OICs and other related issues. We’ve helped hundreds of people resolve their back tax debt and get back to building solid financial futures. Wage garnishments can be particularly scary, because it’s always nerve-wracking to have your wages taken directly from you before you even receive them. If you need assistance with a wage garnishment order or other tax issue feel free to call one of our top New York City tax attorneys and we will get started on your case right away.

Image credit: Tax Law Advocates


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