The most financially-catastrophic IRS debt collection method is on the rise. In fiscal year 2007 (Oct. 1, 2006 through Sept. 20, 2007), the IRS issued nearly 3.8 million wage garnishments and levies combined against taxpayers. That number increased 17 times since fiscal year 2000 when just over 250,000 were issued, according to the Fiscal Year 2007 IRS Enforcement and Service Statistics.
As opposed to liens and seizures - which are limited in their effectiveness – garnishing future income virtually guarantees that the IRS will get their money. While this is a "safe bet" for the IRS, it can be a financial nightmare for anyone who is unlucky enough to be at the receiving end.
The IRS will leave you very little in your paycheck to survive, and there's a good chance that it won't be enough to pay your bills. You may not be able to pay your car payment, house payment, minimum credit card payments, or other important monthly commitments.
There are 3 specific steps that the IRS must go through before a wage garnishment goes into place
- The IRS will send you a "Notice and Demand for Payment"
- You neglect or refuse to pay the tax
- The IRS sends you a "Final Notice of Intent to Levy and Notice of Your Right to A Hearing" (levy notice) at least 30 days before the levy. They may give you this notice in person, leave it at your home or your usual place of business, or send it to your last known address by certified or registered mail, return receipt requested.
If you don't act during this time, you'll be headed straight into a potential financial disaster.
Remember, in the end, the IRS just wants their money. It makes more sense for them to come to a satisfactory installment agreementthan to risk driving you into financial ruin through a garnishment.
By acting quickly, I may be able to get the IRS to drop the levy proceedings and work on an equitable solution.