Questions for the Tax Lady: November 2nd, 2009

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: If the expiring homebuyers credit is extended, will it be modified to include non first-time homebuyers?

Answer: It is still a little too early to tell. Congress has not yet passed a bill to extend the credit, although there are several bills going around aimed at doing so. It will probably be a few more weeks before they take any action, but it is rumored that when they do pass the legislation it will include a $6,500 credit for non first-time homebuyers.

Question #2: How can I get a wage garnishment removed?

In order to get an IRS wage garnishment removed, you are going to need to resolve your account with the IRS. Typically, that involves filing all past due tax returns and paying all past due amounts and assessed penatlies and interest.

If you cannot afford to pay the full amount due to the IRS, then you typically can negotiate a tax debt resolution. This can be either a full settlement through an Offer in Compromise, a monthly payment plan through an Installment Agreement, or temporary protection against IRS collection through Currently Not Collectible status. Click here to learn more about the tax debt settlement services offered by my law firm.

IRS Wage Garnishments

Yesterday morning, my law firm published a blog entry discussing IRS wage garnishments and how to get them released. For those of you who may not know, wage garnishments are one of the IRS’ most aggressive collection tactics where they literally take money from your paycheck and apply the funds towards your IRS back tax debts. You can find a snippet of the article below, but be sure to read the full post at the Roni Deutch Tax Relief Blog.

What is an IRS Wage Garnishment?

Technically speaking, an IRS wage garnishment is a written notice the IRS sends to a taxpayer’s employer that will require them to withhold a significant amount from the taxpayer’s paycheck and forward it directly to the IRS. The employer is legally obligated to follow the IRS’ instructions, and can get hit with serious penalties if they do not.

Garnishments for Self-Employed Taxpayers

Do not make the mistake of thinking that just because you are self-employed that you will not have to worry about a wage garnishment. The IRS can levy your accounts receivable or unpaid contracts to collect your unpaid tax liabilities. Additionally, it is important to remember that a wage garnishment is only one of the IRS’s collection activities. If they cannot garnish your income, then they will likely go after your bank account or personal property.

Notification of a Garnishment

When a taxpayer neglects to pay their full tax liability, the IRS will take certain steps to collect what they are owed. First of all, the IRS will send you a letter notifying you of past due taxes. They will usually demand that you pay within 30 days before taking collection activity. The IRS will then send you a final notice of their intent to levy. If you still do not respond after another 30 days, then the IRS can begin issuing wage garnishments and bank levies to collect your tax debts.