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What is a Wage Levy?

greenbergladev on February 14, 2024

When it comes to tax obligations, the IRS has the authority to take severe measures against those who fail to comply. One such action is a levy, where the IRS can legally seize assets, including wages. In this blog, we’ll answer the question ‘What is a wage levy?’, what to do if you receive a wage levy, and most importantly, how to prevent it from happening in the first place. Let’s get started.

 

What is a Wage Levy?

Sign for the IRS saying "internal revenue service" on a brick wall

A wage levy is a legal action the IRS takes to address unpaid taxes directly from an individual’s wages. The process involves the IRS issuing a wage levy to the taxpayer’s employer, instructing them to withhold a portion of the taxpayer’s wages or salary and remit it to the IRS to settle the outstanding tax debt. This continues until the debt is cleared, alternative payment arrangements are made, or the levy is lifted.

This action is legally mandated by the IRS to ensure compliance with tax laws. 

 

The Process of a Wage Levy

1. IRS Notification Process

hand filling out paper work

Before resorting to levies, the IRS follows a series of steps to notify taxpayers and offer opportunities to resolve their overdue taxes. Initially, taxpayers receive notifications reminding them of their outstanding tax debt and presenting various repayment options, such as installment plans, Offer in Compromise, or appeals through a Collection Due Process (CDP) hearing. 

If the taxpayer takes no action, the IRS issues a Final Notice of Intent to Levy, serving as a final warning to taxpayers. This notice signals the IRS’s intent to seize taxpayer assets if immediate action is not taken to address the outstanding tax debt.

 

2. Employer’s Role in a Wage Levy

IRS logo on the website

When the IRS issues a wage levy to an individual’s employer, the employer is legally required to comply with the instructions outlined in the levy notice. This involves informing employees about the levy and the amount withheld from their wages. 

Additionally, the employer must remit the withheld funds to the IRS according to the specified timeline provided in the notice. To ensure compliance, employers may need to complete certain documentation related to the levy, such as Form 668-W. Employers must adhere to IRS regulations and deadlines throughout the wage levy process to avoid facing penalties or legal consequences.

 

3. Calculation and Amount 

man looking at tax forms using a magnifying lens

When the IRS initiates a wage levy, it considers multiple factors such as the taxpayer’s income, filing status, dependents, and standard deduction. Additionally, there are limits on the amount the IRS can levy, typically to ensure that the taxpayer retains enough income for essential living expenses. So essentially, the IRS aims to implement a wage levy that aligns with taxpayers’ ability to pay while ensuring they can afford necessities.

 

 

Impact of a Wage Levy 

The impact of a wage levy is detrimental to anyone. Financially, a wage levy can substantially reduce the taxpayer’s income, as a portion of their wages is withheld by their employer and sent directly to the IRS to satisfy the tax debt. This reduction in income can lead to financial strain and potential hardships.

In the long term, wage levies can damage credit scores and financial reputations, making it hard to access loans or credit cards. Furthermore, the strain on relationships between employers and employees can create tension in the workplace and even threaten job security. All of these factors contribute to immense stress for those affected. That’s why responding to IRS notices effectively and promptly is crucial. 

 

 

What to do if You Receive a Wage Levy

man calculating taxes using a calculator and holding a pen

Dealing with taxes and the IRS can be incredibly complex and overwhelming. When faced with a wage levy, seeking professional help is crucial. With the assistance of experts, you can ensure you respond appropriately to the situation, maximizing your chances of achieving the best possible outcome. 

While paying off the debts entirely is ideal, it may not always be feasible. Fortunately, there are various options available to resolve the issue, such as arranging installment agreements, negotiating an Offer in Compromise, claiming economic hardship to reduce payments, or having your debt classified as Currently-Not-Collectible. 

Each option has benefits, and determining the best course of action for your circumstances can be challenging. That’s where a tax attorney can be invaluable. They can provide detailed explanations of each option and help you choose the one that best suits your needs.

 

End Note

So there you have it–the answer to the burning question: what is a wage levy? It’s essential to understand that the IRS holds the legal authority to seize your assets, including your wages if you fail to respond to their notices and settle your debts using the options provided. We sincerely hope you never find yourself in this situation. 

However, if you do, it’s crucial to comprehend the process of what to do if you receive a wage levy. Partnering with a professional tax attorney can significantly improve your chances of navigating a wage levy successfully and achieving the best possible outcome for your situation.

If you’re facing tax-related challenges or have concerns about a wage levy, don’t hesitate to reach out to us at Greenberg Law Group, P.A. Our team of experienced tax attorneys has been assisting clients in dealing with the IRS for over 20 years, and we’re here to help you too.

 

Greenberg Law Group, P.A. - Get in touch today!

Can I Add Tax Owed to an Existing IRS Installment Agreement?

greenbergladev on January 15, 2024

For many individuals, paying off entire debts in one go isn’t an option. Fortunately, there are alternatives, and the IRS installment agreement is one such solution. This approach allows taxpayers to strategize their debt payment, making it more manageable and preventing additional financial strain and further legal troubles with the authorities, such as levies. 

Now, what about owing additional taxes and incorporating them into an existing IRS installment agreement? The good news is that it’s possible. However, the feasibility depends on many factors. Continue reading to learn more about the details of installment agreements, eligibility criteria, the process of adding more tax owed to an existing IRS installment agreement, and more! 

 

Understanding IRS Installment Agreements 

An IRS installment agreement is a payment plan that allows taxpayers to settle their debt over time. The payment plan offers both short-term and long-term payment options. Short-term agreements involve clearing the debt within 180 days, while long-term agreements can extend up to 72 months.

To qualify for a short-term payment plan, individuals must have a total balance of less than $100,000 in combined tax, penalties, and interest. For a long-term payment plan, individuals with a combined tax liability, penalties, and interest of $50,000 or less and businesses with $25,000 or less in combined debt meet the eligibility criteria.

You can apply for these installment payments online. 

Note that interest and late-payment penalties will continue to be accrued on the unpaid debt during the installment agreement. 

Clipboard with an IRS Installment Agreement Request document and pen - How to Add New Tax Debt to Payment Plan

 

Adding New Tax Owed to an Existing IRS Installment Agreement

While the IRS typically doesn’t allow taxpayers to have two separate installment agreements, adding a new tax debt to an existing installment plan is possible. However, taxpayers must act swiftly before the IRS assesses the new tax balance and potential default occurs, triggering enforcement actions.

 

How to Add New Tax Debt to Payment Plan

Conditions for Adding Debt 

The IRS evaluates various factors when determining eligibility for incorporating new tax debt into an existing agreement. These considerations encompass the individual’s financial situation, payment history, total debt amount, and compliance with tax filing obligations.

Besides the specific rules and restrictions on different types of installment agreements, the IRS may also impose limitations based on taxpayers’ financial capabilities and history of compliance. Moreover, how often individuals request modification can also affect approval. For example, frequent requests may end up in more scrutiny. Therefore, it’s advisable to follow the process accordingly and consult your trusted tax attorney. Their expertise can assist you in achieving the desired outcome.

Impact on Existing Agreement Terms 

Incorporating new debt into an existing agreement can affect the current terms. Adding a new debt may result in adjusting your monthly payment plan, such as the amount of payment and the total repayment agreement. The IRS will evaluate your current financial situation, taking into account the new debt, and based on that, calculate the installment payments to ensure taxpayers can meet their obligations. 

Staying informed and maintaining open communication with the IRS can help navigate these adjustments effectively.

Person working on installment agreement at a desk with a laptop and calculator - How to Add New Tax Debt to Payment Plan

 

The Process of Modifying an IRS Installment Agreement 

Taxpayers can request the addition of new tax debt by using the IRS’s online payment agreement tool. Through this tool, you can revise the type of plan, payment amount, and payment due date. Individuals can also contact the IRS by phone or mail to set the changes. 

The documentation required depends on the nature of the modifications. Typically, the IRS may ask for documents such as tax returns, bank information, and collection information statements (Form 433-F). Additionally, set-up fees may be charged to cover the cost of providing the installment agreement. 

 

Seeking Professional Tax Assistance 

Navigating the complexities of tax laws is challenging, and errors may lead to significant issues with the authorities. That’s why seeking guidance from a tax attorney is crucial. Our expertise, legal representation, strategic planning, and proficiency in navigating tax intricacies can ensure optimal outcomes and offer peace of mind. If you require legal consultation, don’t hesitate to contact Greenberg Law Group, P.A. Our dedicated team is ready to assist you and provide the best advice for your specific situation.

 

End Note

Establishing a payment plan with the IRS is a proactive way to manage your debt and avoid potential issues. Compliance with current tax laws and maintaining open communication with the IRS are essential factors influencing the approval process if you intend to add additional debt to your existing IRS installment agreement. 

Don’t delay addressing your debt—reach out to us, and we’ll assist you in achieving the desired outcomes for your tax matters!

 

Greenberg Law Group, P.A. - Get in touch today!

 

Final Notice of Intent to Levy: What it Means

greenbergladev on December 22, 2023

Receiving a final notice of intent to levy is a serious and urgent matter, marking your last opportunity to settle the outstanding debt before the IRS legally seizes your assets. While paying the entire debt immediately is the quickest resolution, there are alternative options if you can’t cover the total amount. 

In this article, we’ll delve into the details of the final notice of intent to levy, explore potential solutions, and discuss how seeking assistance from a tax professional can lead to a more favorable outcome. Read on to learn more. 

 

Understanding the Final Notice of Intent to Levy

Final Notice of Intent to Levy illustration with coins sitting on top of tax documents

The final notice of intent to levy is the IRS’s last warning, indicating their plan to seize your assets. The IRS can seize assets like cars and homes, business assets, funds in bank accounts, wages from employers, social security benefits, rights to property, and essentially anything beyond your necessities. In other words, the IRS can take almost everything, leaving you with very little. 

Before reaching this final stage, the IRS typically sends multiple notices, reminding taxpayers of their outstanding debts and offering opportunities to address the issue. The message will also outline your right to appeal under IRC Section 6330, providing taxpayers with a 30-day window to file.

Receiving this final notice is common for individuals with substantial tax debt or those who haven’t taken steps to resolve it. Acting promptly and appropriately is crucial to avoid assets seized by the IRS. 

 

 

 

Identifying a Final Notice of Intent to Levy 

A final notice of intent to levy typically includes all the basic information such as the taxpayer information (name, address, social security number, etc.), the amount owed, the tax period for which the debt is owed, payment instructions, the deadline for action, taxpayer rights, and contact information. 

The Legal Implications of the Notice 

As the official authority for tax matters in the United States, the IRS possesses the legal authority to seize assets to settle a tax debt, as outlined in IRS Code Section 6331. Failing to respond appropriately to the letter can lead to significant repercussions, including the immediate loss of assets, financial disruption, a detrimental impact on your financial reputation, and potential legal consequences such as hefty fines or even criminal charges. 

Timeframe and Deadlines 

Taxpayers must pay close attention to the various timelines and deadlines outlined in the notice. Begin by checking the notice’s date; this is the starting point for the timeline and indicates the urgency of the situation. Pay special attention to the response deadline, which may involve settling the debt or exploring alternatives, like the right to appeal (which we’ll discuss further in this article).

Adhering to these deadlines is crucial for preventing the seizure of assets and avoiding legal complications. 

 

Immediate Steps to Take After Receiving the Notice 

File tabs showing labels for tax law folder

When you receive the IRS’s Final Notice of Intent to Levy, it’s crucial to act immediately, as there are deadlines to meet.

 

Reviewing the Notice for Accuracy

Start by carefully reviewing the letter to ensure the information is accurate. If you spot any errors, your first step should be to contact the number on the notice or file an appeal. Alternatively, consider seeking professional advice to navigate the process more effectively.

Seeking Professional Assistance

If you have any uncertainties about the Final Notice, it’s advisable to consult with a tax professional. With their experience and knowledge, tax attorneys can guide you through the intricacies of tax laws.

Greenberg Law Group, P.A., specializes in all aspects of tax laws and can help you respond to the IRS’s Final Notice of Intent to Levy, ensuring the best possible outcome for your situation.

 

Possible Resolutions and Preventative Measures

Taxpayers receiving a Final Notice of Intent to Levy have several options for addressing their tax debt:

 

desk full of income tax documents, calculator, binder, and pens

Immediate full payment: The quickest resolution is to pay the entire debt immediately. This stops IRS collection activities.

Installment Agreement: An Installment Agreement (IA) is negotiated with the IRS, allowing taxpayers to make monthly payments. Note that the IRS will continue to charge interest, but as long as fees are paid, asset seizure is avoided. 

Offer in Compromise: This involves settling the debt for less than the total amount owed. Applying for an Offer in Compromise is complex, so professional help can be beneficial. 

Collection Due Process Hearing: Taxpayers have the right to appeal through a Collection Due Process Hearing. You have the opportunity to discuss alternative enforcement options before levy action is taken.

CNC Status: Also known as hardship status, Currently Not Collectible (CNC) status is when taxpayers present a collection information statement. This statement demonstrates that being compelled to pay would cause financial hardship.

 

To avoid future levies, taxpayers must stay proactive with their tax returns—ensuring accurate and timely filing. Regularly reviewing and addressing IRS letters is essential to prevent issues from escalating. If struggling to pay taxes, initiate communication with the IRS to discuss and establish a payment plan. Lastly, consider engaging a tax attorney to ensure all aspects of your tax matters are handled appropriately and promptly.

 

 

 

The Role of a Tax Attorney in Resolving a Levy Notice 

Navigating tax-related issues, especially when dealing with a final notice of intent to levy, is intricate and significant. Seeking the assistance of a tax law expert can not only minimize issues but often resolve and prevent tax disputes for taxpayers. If you want to avoid the complexities of managing your taxes, turn to Greenberg Law Group, P.A. We boast a team of experts ready to guide you through every step of the process. Whether it’s filing your taxes or negotiating with the IRS, we’ve got you covered!

 

End Note

Receiving a final notice of intent to levy shouldn’t be taken lightly, as the IRS holds the legal authority to seize your assets. To prevent this stage, it’s crucial to take proactive measures, including maintaining diligent tax filing practices and addressing issues early on.

However, if you do find yourself at the final notice stage, a tax attorney can guide you through this intricate process, ensuring you navigate the complexities of dealing with tax issues and the IRS effectively.

For trusted and professional assistance, reach out to our team at Greenberg Law Group, P.A. Our tax professionals are ready to provide the expertise you need. Let us know your specific situations, and we’ll ensure you receive the best available options.

 

Greenberg Law Group, P.A. - Get in touch today!