Owe Back Taxes? You Should Know A Wage Levy Can Cost You More Than Your Paycheck

August 30, 2013 by

If you have unpaid back taxes, you should know that the IRS and MA DOR can collect the money you owe from the money you earn from your job. This is known as a wage levy, and it can really disrupt your life. Instead of getting the paycheck you expected, you get a few dollars – with the remainder going directly to the IRS or MA DOR to settle your back tax debt.

The Impact of a Wage Levy on Your Life

The first is fairly obvious: when the IRS or MA DOR issues a wage levy, suddenly, you have a lot less money coming into the household. How are you going to pay your bills, buy groceries, or put gas in the car when you have no money?

The situation can spiral out of control quickly. If you, like many people, have your bills automatically taken out of your bank account, an IRS or MA DOR wage levy can create a situation where you have insufficient funds in your account. This can quickly create an expensive nightmare of overdraft fees, late payment charges, and other financial penalties imposed by your creditors and your bank.

That’s not all. An IRS or MA DOR wage levy can really hurt your relationship with your employer. Depending on the type of work you do, the fact that you have significant tax trouble can even be cause for termination. Massachusetts is an at-will employment state, so if your employer feels that your tax wage levy reflects badly on the company, creates an incentive for embezzlement, or is simply too much paperwork for them to deal with, they can legally let you go. Even if you keep your job, your relationship with your employer can be damaged by a wage levy.

People who are self-employed aren’t exempt from income levies, either. The IRS and MA DOR have been known to reach out directly to the people you do business with to collect delinquent taxes. This can really have a negative impact on your business – and your life!

Finally, wage levies can really wreak havoc in your personal life. Money is the number one reason couples fight – and suddenly having less money in the household budget due to a tax wage levy is almost guaranteed to cause disruption. If your partner was unaware of your unpaid tax problems, a wage levy is really not the best way for them to find out!

What Can Be Done About A Wage Levy?

Wage levies can cause real hardship in your life. Working with a Massachusetts tax professional who specializes in tax problem resolutions is the best way to get the stress and financial burden of a wage levy to stop. 

There are several routes to having a wage levy released, including settling your back taxes through an offer in compromise, entering a qualified payment plan, by filing bankruptcy (which may or may not discharge some or all of your tax debts), being declared uncollectible by the IRS or MA DOR, or paying off your back taxes in full. Working with a tax problem solving expert, you’ll learn which option is best for you, considering your individual circumstances.  Help is available!

If you’ve been struggling with a wage levy, call us today. We’re here to help you find an answer to your tax problems. It’s never too late to turn your life around.

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Where’d My Paycheck Go? Understanding IRS Wage and Income Levies

August 28, 2013 by

When Tom S. got a call from HR, he knew it wasn’t good news. “They wanted me to go down there, so I went down there and they told me that they’d gotten a notice from the IRS. Because I had unpaid taxes, the IRS was levying my paycheck. I’d have 125 dollars left after the levy was taken out from each paycheck until all my back taxes were paid off – so I was looking at the next 3 months with hardly no money to live on!”

IRS Wage and Income Levies: Your Employer Has To Comply!

“I asked HR if there was some way they could let things slide, just for a week or two, so I could get prepared for the financial hit,” Tom said. “But they told me no way. If a company doesn’t do what the IRS tells them, they could get hit with huge penalties and fines.” Tom sighed. “By the time that conversation was over, it was pretty clear to me that I was lucky to have a job at all.”

Many people don’t know that it’s perfectly legal for your employer to terminate your employment if you have tax trouble with the IRS or MA DOR.  Having tax problems can be seen as a motivation to commit embezzlement – and no one wants to have a potential criminal working for them!

Types of Wage and Income Levies

There are two types of IRS wage and income levies. A continuous levy is generally brought against someone who has an employer and receives a regular paycheck. A non-continuous levy is generally brought against someone who receives a form 1099-MISC, and is considered self-employed. If you’re self-employed, you can imagine how embarrassing and stressful it would be to have the IRS contacting the people you do business with directly trying to collect your tax debts. It’s the type of thing that can ruin your business reputation.

What Can Be Done About Wage and Income Levies

If you receive notice that the IRS is going to levy your wages or other income, you want to get help right away. An experienced tax professional can work with the IRS on your behalf to resolve your tax issues and have the wage or income levy released. This can mean setting up a payment plan with the IRS, making an offer in compromise, or taking advantage of other legal means to solve your tax problems.

You have to take action! A wage or income levy won’t go away on its own, and every day it’s in place is a day that’s damaging your reputation with your employer or customers. If you’re dealing with a wage or income levy now, and you want the pain to stop, give us a call. We’re here to help!

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