Can you guess what has become the drastic "collection method of choice" for the IRS in recent years? Is it garnishments, liens or seizures?
A Garnishment is a form of levy that is a legal seizure of your wages, salary or federal payments to satisfy a tax debt. A lien is a claim on personal property used as security for the tax debt. A seizure is a claiming of your personal property to satisfy the tax debt that may result in the property being sold at auction.
So do you have an idea which of these methods is the IRS' "weapon of choice"? If you guess "garnishment" you're absolutely right. A garnishment is basically a levy on property that is yours but is held by someone else, such as wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions.
Tapping Into Your Paycheck - It's Easy Money for the IRS. Think about it. A lien on your property can certainly make life hard on you by destroying your credit and making it virtually impossible to sell your house - but it doesn't necessarily get the IRS what they want...your money.
A lien is a coercion tactic more so than a direct ploy to get what they're really after – your cold, hard cash. A seizure of your property gives them just that – property...but not necessarily money. They still have to go through the trouble and the cost of selling your belongings in an auction to extract money out of your belongings.
The IRS realizes that the one way it can virtually guarantee to get their money is to place a form of levy on your future income – a garnishment. This is a "safe bet" for the IRS, since they know that you will always need to earn money to survive in the future.
Before Wage Garnishment Goes Into Effect. There are specific steps that the IRS must go through before a wage garnishment goes into place:
- The IRS must assess your tax and notify you that there is a deficiency by sending 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.
- Once you receive your "Notice and Demand for Payment" or worse...the "Final Notice of Intent to Levy and Notice of Your Right to A Hearing" – it's time to take massive action.
** Bryson Law Firm is a Louisiana law firm focusing 100% of our practice on helping people & businesses solve their IRS and Louisiana state tax problems.