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Under all circumstances when the IRS threatens a levy, you have the right to representation. If you communicate openly with the IRS, levies can be avoided. With cooperation prior to an issued levy, negotiating positions are in good principles.

Bank Levy

A bank levy is a one-time levy. You are free to use your account in a normal fashion after the bank freezes the amount required by the levy. The bank is not allowed to hand over your money to the IRS right away. The money is on a holding period for 21 days. Once that holding period is concluded the money is sent to the IRS and is irretrievable; any future deposits can be reached only with additional levy action by the IRS. However, if you do not resolve your outstanding tax debt with the first levy, the IRS may by their discretion levy your bank account again.

Wage Garnishment

Once the IRS becomes unwilling to wait any longer to collect the taxes you owe, they will implement a Wage Garnishment action. The most common types of garnishments are:

* Employee Garnishments
* 1099 Garnishments
* Federal Payment Levy Program (FPLP)

Notices of intent to levy a Wage Garnishment are sent to the employer, i.e. your boss, your hiring contractor, or the U.S. government.

Employee Garnishments

The IRS can demand your employer to withhold a portion of your wages from your paycheck and send it directly to the IRS. Keep in mind; although there is a small exempt amount that cannot be levied, this amount is often not enough to cover regular living expenses.

A garnishment upon wages is considered to be a continuous levy. It is applied only once and remains applicable to all future wages until either it is released by the IRS for cause or the debt is fully paid.

1099 Wage Garnishments

This type of garnishment applies to payments owed to non-salaried subcontractors not on the regular payroll. A garnishment of 1099 wages is a one-time levy as opposed to a continuous levy. The employer is required to hold up to the amount owed to the IRS.

This levy attaches to 100% of the funds not yet paid to the sub-contractor at the time the garnishment is received. The levy does not apply to future 1099 payouts.

Electronic Federal Payment Levy Program (FPLP)

This type of wage garnishment applies to government employees and recipients of Social Security payments. This program electronically levies your federal payments paid through the Department of Treasury; Financial Management Services. Under the FPLP, the government generally withholds 15% of the wages/payments to reduce past due tax liabilities.

It takes longer for the release of this type of garnishment. The levy can remain in effect for several weeks after the IRS agrees to release it due to lengthy government processing.

Releasing a Wage Garnishment

Negotiation with the IRS is required to obtain a wage garnishment release. Possible qualifying reasons for release are:

Setting up an Installment Agreement

Promising to pay the total tax debt immediately

The full amount of the tax debt has been paid

An amended tax return was filed, showing you do not owe the tax

Your monthly expenses exceed your monthly income

The levy was issued due to an IRS processing error

You are behind on your mortgage, rent or medical bills, etc.

The levy inhibits the full collection of the balance due

You Need Qualified Representation

Instant Tax Solutions can represent you in IRS negotiations, resolving your wage garnishment issues, and bringing your tax problems to an end. We have an excellent success rate in the release of wage garnishments. It is very likely we will be able to have the garnishment released before your next paycheck.

If you have received an IRS notice of Intent to Levy, Instant Tax Solutions may be able to prevent the garnishment from happening and avoid further collection action.

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