What is Wage Garnishment?

If you are like most taxpayers, when sorting through your tax situation you may find yourself reading many words, phrases, and concepts you might not be familiar with, terms such as: liens, abatement, levies, garnishments, accrual, and many others.

Assuming you are not very familiar with law and finance, it may be difficult to even understand what the issues you are facing are, and what you can do to resolve them. It may even seem that the information you are provided is deliberately confusing or misleading.

This series of articles are intended to assist you in understanding what these terms are, and by doing so, help you make the best choices and make the most of the opportunities available to you.

Let us begin today by defining wage garnishment, which can be an unfortunate and quite common consequences of owing taxes to the government.

Wage Garnishment

One, if not the, most common action the IRS will take with someone they claim owes back taxes, is to create a Wage Garnishment. Legally what this means is that a legal entity; be that your employer, a lender, or a government agency can take money directly from a paycheck to pay the amount that is owed.

For most people it will mean that your paycheck, instead of being given to you in full, will be discounted a portion, until the debt is settled. While an employer cannot legally fire you for having a wage garnishment, these garnishments can typically severely affect your personal budget and leave you with a fraction of the income you may need to live on.

Can a Wage Garnishment be removed?

The most direct way to solve a Wage Garnishment is of course to pay the debt in full. Specifically, the IRS may remove your wage garnishment if you get back into good standing with them, either by paying the complete amount or beginning a payment plan.

The direct payment method is not always an option for most taxpayers, many do not have the income to be able to easily pay back their government debt, which may be a significant amount and often accumulated over years.

He good news is that there are options. The IRS has the “Fresh Start Program” which allows alternatives to garnishment. First, Installed Agreements, this gives you the chance to negotiate a reasonable payment amount and schedule, as opposed to a large portion of your paycheck being taken away without you having any say in it.

Another possibility is the Offer in Compromise (OIC), which is a program that allows certain select taxpayers to settle their debt for less than the full amount owed.

Additionally, you may want to claim financial hardship, which involves proving that a wage garnishment would impact your budget in a way that it makes it impossible to meet your own and your family’s basic needs. Unfortunately, this is a common reality for many people that are subjected to wage garnishment. If this is proven and approved, the IRS may cease to collect garnishment temporarily.

Can Solvable.com help me? - please note these are to be modified depending on website name.

Having even the threat of a Wage Garnishment can be of course a very negative and stressful experience. You may feel you are out of options or facing this alone. Here at Solvable.com we can assist you.

Finding a professional help who can help you through your own specific situation may seem challenging. However, at Solvable.com you will be able to connect you with multiple qualified tax professionals can understand and guide you and have experience working with the IRS helping taxpayers like you removing wage garnishments.

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The IRS Fresh Start Initiative

What does the IRS Fresh Start Program do?

The IRS began the Fresh Start Program in 2011 with the main objective of helping taxpayers who may be currently in debt with the IRS. Once a taxpayer is qualified for this program, the IRS will proceed to have a part of their total debt forgiven. The main benchmark used to evaluate if a taxpayer can enter this program is their financial situation. The basic criteria here is quite simple, if a person cannot pay, the IRS will not collect.

For those who do have the means to be able to pay, at least partially, the solution offered in this program is the Offer in Compromise (OIC). What term means is that once the financial situation and ability to pay of the taxpayer is evaluated, the IRS can reduce the total amount owed, in essence eliminating a significant amount of that debt. Once this is done you can proceed to make monthly payments or make a lump sum payment to eliminate the debt completely.

To be able to apply for this program there are specific criteria that need to be met, and not everyone who has debt will apply. If a company that specializes in back taxes promises you this solution without knowing your specific financial situation, please be wary, since only the IRS has the capacity to approve an OIC, this cannot be granted by any private company.

Can I qualify for the IRS Fresh Start Program?

As mentioned, there are specific criteria that are necessary to qualify for a settlement (OIC) or to be able to remove a lien or wage garnishment. To begin, two are required:

• All tax returns must be filed, there cannot be any missing or unfiled years.
• You are up to date with estimated tax payments or that your current withholdings are correct, and they have been so for the last 6 months

How can I apply for IRS Back Tax Forgiveness Program?

The IRS has recently expanded its Fresh Start Program to help more people. Under these new rules you do not have to present extensive financial records and details, this makes it a lot easier to qualify. Consider the following changes:

• Tax Liens. There has been a substantial increase in the limit of what a taxpayer can have in back taxes before a Notice of Federal Tax Lien s filed (it is now USD$10k).
• Monthly Payment Agreements. Some taxpayers may apply to be able to pay their delinquent back taxes in monthly installments if they cannot pay the full amount in a single sum.
• Offers in Compromise (OIC). This agreement allows a settlement with the IRS which results in a reduction of the total of back taxes owed. Right now, the IRS has become more flexible when reviewing a taxpayer’s financial situation. This means this program is available to a much more taxpayers than before.

What is the Tax Gap

IRS Tax Gap Estimates for 2008-2010

IRS Tax Gap Update

Regularly the IRS releases estimates on the Tax Gap. This is a report that gives an overview of how the country’s taxpayers are complying with federal tax laws; the gap itself is defined by what the taxpayers should be paying as opposed to what is being paid to the IRS. This update covers 2008 to 2010 and one of the main findings is that there is no meaningful difference in tax compliance since the last report the IRS published in 2006.

In estimate, the 2008-2010 tax gap is USD$458B (Billion), compared to 2006’s USD$450B. IRS actions and collection efforts, combined with late payments, has had the effect of reducing the total debt in the 2008-2010 period to USD$406B, a difference of USD$52B.

An important takeaway shared is that 81.7% of taxpayers are voluntarily compliant, compared to prior period estimates if of 83.1%. In the current period the IRS reported a total net compliance of 83.7%.

This increase in the tax gap between the two periods and lower voluntary compliance has been attributed to better tax gap estimation and not to any changes in the overall actions or behaviors of taxpayers. Also, the lower number is consistent with the period of recession that was experienced during the 2008 – 201 period in the country.

The IRS values high voluntary tax compliance, since it is vitally important metric to gauge taxpayer confidence in the tax system and their belief in it’s fairness. The fact is that when a taxpayer does not pay their due, the burden is shifted to those who pay their share.

This new information updates what been proven through research, that the level of information reporting is strongly related to higher voluntary compliance by the taxpayers. An important objective of the IRS is to keep voluntary compliance high. This is assisted through efforts educating professional preparers and regular taxpayers, working with businesses to deal with employment taxes and ongoing efforts to improve international tax compliance.

The Taxpayer Advocacy Panel

What is Taxpayer Advocacy Panel?

As a federal advisory committee to the IRS, the Taxpayer Advocacy Panel (TAP) has as a main goal to identify important tax issues for taxpayers, and second, provides information and perspective on the products, programs and services provided by the IRS. Additionally, it functions as a focus group that gives counsel to the National Taxpayer Advocate (NTA) and IRS

The TAP itself is comprised of a diverse group of citizen volunteers (75 in total), that represent multiple demographic backgrounds and all states in the country, including DC and Puerto Rico. This group comes together to research and identify issues that affect taxpayers and then proceed to analyze and make recommendations to the IRS itself to improve their services and products. Since 2015 the group has also included at least one member that lives outside the country, representing taxpayers that live abroad.

The members of TAP research and collect information and ideas from project committees, communities, focus groups and citizens to gather feedback on subjects and issues that are important to taxpayers. This feedback is crafted into recommendations that are later submitted to the IRS for consideration and evaluation.

What can I do to help Improve the IRS?

If you or your community have a suggestion or idea to improve IRS services, please feel free to contact TAP our website (WEBSITE HERE) – or call us at our toll-free number 888-912-1227.

The Taxpayer Bill of Rights

What is The Taxpayer Bill of Rights

All Taxpayers in the country enjoy a set of specific rights. It is important that all taxpayers are aware of them:

1. The Right to Be Informed

Taxpayers are entitled to all the information they need to be able to comply with the tax laws. The IRS is obligated to provide clear explanations of the laws and procedures in all tax forms, correspondence, publications, and notices. This also implies that the IRS must clearly provide information and explanations about decisions concerning their tax accounts and the outcomes.

2. The Right to Quality Service

The IRS must provide taxpayers with quality, professional and timely assistance when it is required. This means that the information must be delivered in a clear way, so taxpayers can understand it. Additionally, taxpayers have the right to speak to a supervisor if the service they receive from the IRS is not meeting this standard.

3. The Right to Pay No More than the Correct Amount of Tax

The IRS must apply all tax payments properly and taxpayers should only have to pay the amount legally due (note, this includes interest and penalties).

4. The Right to Challenge the IRS’s Position and Be Heard

Raising objections and providing additional documentation when challenging an IRS action (or proposed action) is a protected right. The IRS will consider and respond to these objections in a timely and fair manner, and additionally the IRS is required to respond to these challenges.

5. The Right to Appeal an IRS Decision in an Independent Forum

The taxpayers have the right to appeal most IRS actions and decisions, this includes penalties, and to receive a written response from the Office of Appeals. Taxpayers can also take their cases to court.

6. The Right to Finality

This right is related to the first right, in that is the taxpayer is allowed to have full information about time, in relation to IRS actions. This includes the maximum amount of time the IRS has to perform an audit on a tax year, the maximum amount of time to collect back taxes, the maximum amount of time they have to challenge a decision and also when an audit has concluded.

7. The Right to Privacy

This right means that the IRS when performing its investigation or inquiries will be no more intrusive than necessary. All due process, rights and search and seizure protections will be followed. The IRS must also provide a due process hearing where applicable.

8. The Right to Confidentiality

There is an expectation of privacy on any information the taxpayer provides to the IRS. This information is not allowed to be shared with third parties unless authorized by law or the taxpayer themselves. If any of taxpayer information is disclosed or wrongfully used by tax preparers, employees or others, the taxpayers have the right to take appropriate legal action.

9. The Right to Retain Representation

In dealing with the IRS the taxpayer has the right to choose and retain a representative. If a taxpayer cannot afford a representative, they also have the right to obtain assistance from a Low Income Taxpayer Clinic.

10. The Right to a Fair and Just Tax System

This Right outlines the expectation that the IRS will fairly evaluate and consider circumstances and facts that might affect a taxpayers capacity to pay, their liabilities and the capacity to provide information in a timely manner. This right also includes seeking assistance from a Taxpayer Advocate Service when the IRS has not resolved their issues.