If you’ve already attempted to stop an IRS wage garnishment and have thus far been unsuccessful, then you should not throw in the towel just yet. IRS wage garnishment is close to the most severe action that the IRS will take to retrieve taxes from you. If you still do not repay your tax debt after several months of wage garnishment, then the next option for the IRS is to start legal proceedings that can result in you having jail time. However, the good news is that the IRS is more interested in an amicable resolution, and so there are some final actions you can take when nothing else has worked to stop the IRS from wage garnishment.
1. Plead Poverty
If you can prove to the IRS that their tax garnishment will cause you undue financial hardship, then they may let up until your financial situation improves. If you are genuinely unable to pay for your basic living expenses because the IRS is garnishing your wages, then pleading poverty is a viable option and you may just have success in getting them to hold off. If you feel as though you are able to plead poverty then speaking to a tax professional is recommended, as they will know the formulas used by the IRS to decide if you really are facing financial hardship under their definition.
2. Get a New Job
Know that the IRS wage garnishment is for your specific employer. If you quit your current job and find another one, the IRS will have to create a new garnishment, which can take them several months to file. This strategy may also work if you simply take unpaid time off or quit your job temporarily, as it will force your employer to tell the IRS that you are no longer employed there, and so the IRS wage garnishment will cease to be an option. However, if you go with temporarily quitting your job then make sure that the company or employer you work for will rehire you. If they do then, the IRS will have to restart the garnishment process all the same.
3. Ask for an Offer in Compromise
If you cannot afford to pay off your federal tax debt, even when broken down into monthly payments, then you may want to try negotiating an Offer in Compromise. Doing so will mean that you and the IRS come to an agreed upon amount that you are able to repay, and they will forgive the remainder. Once an Offer in Compromise has been met your tax garnishment, and any other liens or levies will be removed.
4. Pay the Debt Off
If you’ve done everything to stop a wage garnishment in its tracks without paying off the debt that you owe to the IRS, then the best thing to do may just be to buckle up and pay off your tax liability. This includes interest and penalties. Once you’ve fully paid off your federal tax debt, the IRS will remove the tax levy against your income. Of course, you may not be paying off your tax debt, because you actually cannot afford to do so. However, if repayment is a possibility, then it is likely the best option.
5. File for Bankruptcy
Filing for bankruptcy is a last resort that you should not consider until you have gone through every other viable option. However, it is an option that will stop a wage garnishment in its tracks. However, bankruptcy has an impact on your entire financial situation, which will damage your capacity to take out mortgages or loans in the future. If you decide to go with filing for bankruptcy as a way to stop an IRS wage garnishment, then be aware that it will halt them from garnishing your wages for a certain period of time. However, you will still be held accountable for your tax debt.