IRS Garnishment

Tax Act

Sometimes things go wrong and you cannot make those payments. I know a case where a fellow student defaulted on his student loan payments and paid the penalty at the hands of the IRS. The IRS was actually able to prevent him from accessing his income tax refund. This went on until the student loan amount was completely paid off. The IRS is indeed a very powerful organization.

IRS Garnishment is never an ideal situation for the tax payer. It is however very popular as a method to recoup funds owed to the state. In the case of student loans mentioned earlier, it should be noted that the state can only take a restricted amount of a student’s wages when ‘garnishing’ from such a student who has defaulted.

By law, the state can take a maximum of 15 percent of a student’s disposable income but it should be clarified that it cannot take an amount that is more than equal to 30 times what the federal minimum wage is at the time. If that sounds complicated it should not be a surprise since tax law can indeed be one of the most complicated genres within legal studies. This is why when faced with tax issues or even possible criminal charges, it is always best to seek the services of a qualified and experienced tax attorney.

It should not be assumed that the tax payer has no options. As it stands, one can actually object to the imposition of the wage garnishment. There are however certain guidelines that must be followed and an internet search should put you on the right path to finding out how such an objection can be made. If one is not keen on browsing the internet, one can always seek the services of an enrolled agent. It should be noted that these professionals are not authorized to represent you in the event you have to go to court but they are usually very helpful in any other matter related to tax issues and garnishment situations.

Another option open to those seeking to fight IRS garnishment involves loan management. Negotiating with your lending agency in the hope of getting a new repayment schedule can assist in keeping the IRS ‘at bay’ for a while. At the end of the day, it is never a bad idea to get advice from a professional. This writer is of the view that going to an enrolled agent or tax attorney for advice can never hurt. Even if you have to look for money to pay these professionals, the initial cost will most likely save your greater cost in the long run.

When faced with a power like the IRS why short change yourself. Yes, there are some in-built rules that give you the tax payer some protection. For example, the state is not allowed to ‘garnish’ any amount it sees fit. It cannot take an amount that leaves you with benefits which calculate to below $9000 a year or $ 750 a month.

To illustrate how it works, I had a friend who received $900 per month in federal benefits. The state could only take $150 which was the amount of my friend’s $900 benefit that was over $750; or the state could have taken $135 which was the calculated 15 percent of my friend’s total $900 benefit. In his case, my friend had to forfeit $135 each month which was the lesser amount.

On top of all these powers, the IRS can still sue you to collect funds owed. Of course no one wishes to have to face the law courts as a defendant in a tax matter. Being a student can be tough as it is and having to go to court does not make the student experience any easier.

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One thought on “IRS Garnishment”

  1. Anyways, great article i really enjoy reading. I understand that it is possible to make a deduction from your taxable income from interest paid on qualifying student loans. But i believe, that i qualify for this, as I have been paying on my student loans for some time now. However, how do I go about showing this? Please clear my doubt.

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