wage garnishment

Garnishment is defined as a legal procedure by which a creditor can collect what a debtor owes. It is usually the result of a court order which initiates the process of deducting money from an employee’s monetary compensation – including salary and wages.

Wage garnishment is typically the last resort in collecting debt as it seen as a more drastic measure. It is said that federal law only allows state and federal government agencies (not individual or private creditors) to take your tax refund as payment toward a debt. However, once you deposit the refund into your bank account, these rules no longer apply – it just depends on the laws of your state.

Federal income tax refunds are the most common federal payments which is why government agencies are more likely to garnish them. This is allowed by the Treasury Offset Program (TOP) which is administered by the United States Department of Treasury’s Financial Management Service (FMS).

The outstanding taxes you owe to the Internal Revenue Service (IRS) must be paid before making your tax refunds become available for garnishment by other government agencies because the IRS will pay itself first.

Plan to avoid garnishment, if possible, because it will end up costing less if you come to an agreement with the IRS. You are in danger of having wages garnished if the IRS demanded payment for a tax liability, but you failed to respond. You will then a receive a notice 30 days prior to garnishment informing you of their actions.

Need help resolving a wage garnishment issue with the IRS? Contact Tax Defense Partners today! Our tax professionals can help delay or stop the process entirely.