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Back Tax CPA explains the IRS Wage Garnishment Process for Back Taxes | 2015 IRS Publication 1494

Back tax CPA in Wilmington NC explains the IRS garnishment process.

You can check if the IRS is garnishing more wages than required by using Publication 1494, Table for Figuring Amount Exempt from Levy on Wages, Salary and Other Income. If your paycheck gets garnished, consider calling me for a free consult (910) 399-2705.

Back tax CPAs know IRS wage garnishment is financially devastating, sometimes leaving you a mere pittance to live on. And the IRS forces your employer to comply, even if the garnishment is in error! This post deals with IRS Publication 1494, Table for Figuring Amount Exempt from Levy on Wages, Salary, and Other Income, and how a CPA might deal with IRS wage garnishment. Remember the State garnishes wages too.

“The IRS doesn’t decide how much they’ll take from your paycheck. Their Publication 1494, Table for Figuring Amount Exempt from Levy on Wages, Salary, and Other Income, calculates how much they’ll let you keep.” 
– Gary Bode, back tax CPA

Back Taxes are the most common cause for IRS wage garnishment

There is no stereotypical back tax client. Some back tax cases result in a refund, but you have to file a back tax return to get it. In the mean time the IRS prepares a “substitute tax return” that relies on their information, which is mostly income based with no deductions or tax credits.

By the time wage garnishment occurs the IRS has sent you, and your back tax CPA if you have one, multiple notices. But I check the amount owed. I check to see if they have the correct taxpayer. Identity theft is always a possibility. That’s why we use a secure client portal to protect sensitive info.

What can be done about wage garnishment?

Bad news on IRS wage garnishments

Once the IRS garnishes they’re reluctant to stop. While I discuss some anti garnishment strategies below, they take time. No back tax CPA can guarantee you rapid relief even if the IRS is in error.

Check to see if the IRS followed its own rules

If not, you have a valid reason to request release from the federal tax lien, by filing IRS Form 12277. Sometimes it only takes 30 days. As an example, one report shows that the IRS sometimes levies without notifying your CPA. While IRS Agents have detailed garnishment manuals, sometimes they violate procedural guidelines. It doesn’t happen often but a good back tax CPA would check!

Your back tax CPA can sometimes get a federal tax lien withdrawn even if you still owe the IRS. You have to in current compliance. That means filing all back tax returns and keeping up with current estimated tax payment, if any. So sometimes there’s a window of opportunity form January 1st to April 15th, 2015 to sort of slide home.

Verify the amount you’re being garnished

Verifying the amount they demand is always prudent. Again refer to IRS Publication 1494, Table for Figuring Amount Exempt from Levy on Wages, Salary and Other Income.

Check to see if the tax lien amount is correct

This is a basic step any back tax CPA performs. The IRS isn’t always correct with their calculations. If you haven’t filed your back tax returns do so ASAP. The IRS tax lien amount usually drops dramatically once you file the back tax returns. Perhaps enough to allow them to relinquish the tax lien and stop garnishing wages. Why? Accurate back tax returns include legitimate deductions and tax credits. The IRS substitute return relies mostly on income information, only one side of an accurate back tax return.

Check to see if you can pay less than the entire amount

An Offer in Compromise is the infamous pennies on the dollar technique hawked on late night TV. Any back tax CPA would check to see if you qualify for this strategy, and if so, how cost-effective it might be for you. The IRS relaxed Offer in Compromise qualifications. You don’t hear about it as much since various States have dismantled most of the big late night TV offer mills. The IRS now has a pre qualifying offer in compromise tool on their website. It will take maybe five minutes to complete. If you qualify you probably need a back tax CPA to file the actual Offer in Compromise.

Back tax CPAs routinely request additional time to prepare your case

The IRS grants additional time when they have a CPA to deal with, so we’re usually granted this request. If we’re engaged before the garnishment, this simple request provides time to build a solution before garnishment. But some back tax clients waste valuable defense time by doing nothing. The IRS seems like a sleeping elephant at times, so back tax clients get complacent until the elephant rolls over and crushes them.

File your back taxes

Some folks cannot or will not address an IRS issue until they’re garnished. If you don’t file your tax returns, the IRS is kind enough to calculate a “substitute return”. But they don’t factor in legitimate deductions and credits. So their levy amount is always more than what a CPA prepared back tax return shows.

Amend your prior tax returns

Back tax CPAs often find legitimate tax deductions and credits on earlier returns, especially if they were self-prepared.

“Strange but true. Some folks have their wages garnished despite generating a tax refund when the back tax returns get filed. Obviously your back tax CPA will resolve that ASAP.”
– Gary Bode, back tax CPA tax accountant

Pay the entire IRS demand

Sometimes families will help with loans. This is eating humble pie, but it beats having the most powerful creditor in America on your back. Selling assets may help raise cash. Some folks still have credit before the tax lien and can pay the IRS with a credit card. But check with a back tax CPA to understand your rights to re-claim any of the back taxes the IRS collected in error.

Claim hardship

If I can prove the garnishment actually decreases chances of the IRS being paid, they may drop the lien. The IRS term for a hardship case is currently uncollectible status.

Enter into an installment agreement with the IRS

The IRS relaxed installment agreement parameters during the recession. If you sign off and comply, the IRS may release the lien and end the garnishment.

I’m a back tax CPA

Our firm serves a wide geographical base through our virtual office. We offer a free initial phone consult. We handle many, many back tax cases, often generating a refund. Just call (910) 399-2705.

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