When it comes to the IRS, it is a no-joke sort of agency. There are rules and regulations as well as about eight thousand hoops you have to jump through if the IRS comes after you. You will likely be required to provide specific documentation for a specified amount of time that can go back as far as 10+ years.
If you’re not able to provide this documentation, or if your documentation isn’t up to the standard that the IRS needs it to be, you may find that you’ll suffer from IRS penalties. These can range from an impacted credit score to garnishments and even levies.
Garnishment: What Is It and What to Know
Unfortunately, this is not a cute mispronunciation of a garnish that you’d put on a dish. Instead, a garnishment is a specific order that is backed by legal power that will force your employer to collect an additional amount of your earnings that will then be handed over to whichever creditor holds your garnishment. By law, there is nothing your employer can to do avoid this, meaning that whatever percentage of/requested total is given to your employer is how much you will lose from your wages.
If the thought of losing a portion of your wages fills you with dread, you’re not alone. Unfortunately, if you are forced to deal with a garnishment, the only way out of it is to try and negotiate separate repayment options with the creditor or to file bankruptcy. Both can have extremely negative consequences on your credit score and viability for future lending, so they’re not decisions to make lightly. Otherwise, outside of those options… you will be forced to make your repayment in full, no matter how long that takes.
Levies: What They Are and What to Know
Conversely, the IRS may put a levy on your finances. It is very similar to a garnishment but different in extremely specific ways. When it comes to levies, these are uncontestable legal orders that will freeze all of your bank accounts and immediately seize the money inside of them. Keep in mind that this isn’t a one-time action – if your bank account is seized, but then you continue to deposit money into it, you may find that the additional money will also be seized by whatever creditor is in charge of your situation.
Typically – although it is not a hard science – a private creditor will default to using garnishments, whereas government agencies will jump straight to the levy.
Small Mercies
Although having to deal with a garnishment or a levy is no one’s idea of a good time, some elements might make it a bit more palatable. When it comes to garnishments, realize that the creditor can only take a percentage of your wages. They are legally not allowed to take anything more than a predetermined percentage, meaning that you should – hopefully – still have some money left over from your paycheck for living expenses. Additionally, elements such as child support and the like have the potential to not be affected by the garnishment, so you won’t have to scramble to get additional money for these sorts of things.
The Light at the End of the Tunnel
If you’re already in the process of having to deal with levies and garnishment, you might feel as if the end is already here and that it’s too late for any help. However, that’s not the case at all! Here at Guardian Tax Law, we have an elite staff filled with knowledgeable and experienced professionals, all of whom want to help you deal with your tax and IRS woes.
Being alone with dealing with the IRS will only make things feel worse, so don’t give yourself that additional stress. Instead, reach out to us to explain your situation and see what we can do to help.
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