Can You Stop IRS Wage Garnishment?

IRS wage garnishment is a collection action by the Internal Revenue Service to recover unpaid tax debts. It involves the IRS directly contacting an employer and requiring them to withhold a portion of wages to satisfy the tax liability. Unlike other creditors, the IRS does not need a court order to initiate this process, giving it significant authority. This direct seizure of income can significantly impact a taxpayer’s financial stability. Garnishment continues until the tax debt is paid or an alternative resolution is established.

Responding to a Notice of Intent to Levy

The IRS sends several notices before initiating a wage garnishment, with the “Final Notice of Intent to Levy and Notice of Your Right to a Hearing” (IRS Letter 1058 or LT11) being the most significant. This notice informs the taxpayer of the IRS’s intent to seize assets, including wages, providing a 30-day window to respond. Receiving this letter means the IRS is preparing for enforced collection, requiring action to prevent garnishment.

During this 30-day period, a taxpayer can request a Collection Due Process (CDP) hearing. A timely request for a CDP hearing automatically pauses collection actions, including wage garnishment, until the hearing resolves. This hearing provides an opportunity to discuss the tax liability, propose alternative payment options, or dispute the debt with an impartial IRS Appeals Officer. Failing to act within this 30-day window can result in the IRS proceeding with the levy.

Available Options to Halt Wage Garnishment

To halt or prevent wage garnishment, several IRS programs and agreements provide relief. These options allow taxpayers to address their debt through structured arrangements rather than through enforced collection. Each approach offers a different path to resolution based on financial circumstances.

An Installment Agreement (IA)

An Installment Agreement (IA) allows taxpayers to pay tax debt in monthly payments over a set period, up to 72 months. An approved installment agreement stops or prevents wage garnishments, providing relief from collection actions. To qualify, taxpayers must be current with all filing and payment obligations. While an IA is in place, the IRS refrains from new levies, though existing federal tax liens may remain.

An Offer in Compromise (OIC)

An Offer in Compromise (OIC) allows taxpayers to settle tax debt for a lower amount than what is owed. The IRS may accept an OIC if there is doubt as to collectibility (the taxpayer cannot pay the full amount), doubt as to liability (the amount owed is incorrect), or if collecting the full amount would cause economic hardship (effective tax administration). Submission of a valid OIC application suspends collection actions, including wage garnishment, while the offer is under consideration. If accepted, the OIC provides a permanent resolution for the agreed-upon amount.

Currently Not Collectible (CNC)

Currently Not Collectible (CNC) status is an option for taxpayers unable to pay tax debt due to financial hardship. If granted CNC status, the IRS temporarily halts collection efforts, including wage garnishments and levies. This status is reviewed periodically by the IRS to determine if the taxpayer’s financial situation has improved. While in CNC status, the tax debt still exists, and interest and penalties may continue to accrue.

Preparing Your Financial Information

To pursue any resolution option with the IRS, an accurate presentation of financial information is necessary. The IRS uses this data to assess a taxpayer’s ability to pay and to determine reasonable collection potential. Gathering all relevant documents beforehand streamlines the process and supports any proposed resolution.

Key financial documents include proof of income (e.g., recent pay stubs, W-2s, 1099s). Bank statements and investment account statements are essential to show available funds and assets. A detailed list of monthly living expenses, including housing, utilities, food, transportation, and medical costs, helps demonstrate financial hardship or capacity to pay.

Asset information (real estate, vehicles, other valuable property) should be compiled, including current values and any outstanding loans. Details on liabilities (credit card debt, personal loans, mortgages) are required for a complete financial picture. Copies of past tax returns relevant to the debt are needed for verification. The IRS may request documentation for any other claims of financial hardship or specific circumstances.

Engaging with the IRS for Resolution

After assembling financial information, the next step involves contacting the IRS to propose a resolution. This engagement requires a structured approach for submission and follow-up. The IRS has specific channels for handling collection matters, and understanding these can facilitate the process.

Taxpayers can contact the IRS Collection department directly by phone, at the number provided on the levy notice or the general IRS collection line (e.g., 800-829-3903 for individuals). Alternatively, submit information and forms via mail to the address on IRS correspondence. When submitting documents, it is advisable to send them by certified mail with a return receipt requested for delivery record.

After submission, the IRS acknowledges receipt and begins processing, which can take weeks to months depending on the case’s complexity. Taxpayers should be prepared for potential follow-up questions from the IRS or the assignment of a Revenue Officer to their case. Maintaining clear communication and promptly responding to all IRS inquiries is important to avoid delays or adverse outcomes.