When the IRS places a levy on your wages, it can be a frightening and stressful experience for any taxpayer. In addition to the strain of dealing with the tax debt that you owe to the IRS, you may also have concerns as to how your employer is going to react to the levy. Most taxpayers would prefer that their employers not have knowledge of or be involved with their personal tax issues. Fortunately, at a minimum, you do not have to worry about being fired as a result of the levy. If you were terminated for this reason, the employer would be liable.
Employers Cannot Retaliate Against Employees With Wage Levies
No matter what your tax problems are, you are still protected by fair labor laws. If your wages are levied, it is important that you and your employer are aware of the following:
- The Consumer Credit Protection Act protects you from termination due to a wage garnishment, even if it is from the IRS.
- If your employer takes retaliatory action against you as a result of your tax problem, they can be fined up to $1,000.
- In addition, your employer can be imprisoned for up to one year.
- If you need to pursue action against an employer, you would file a case with the U.S. Department of Labor.
What should you do if you are facing an IRS levy? Take the following steps:
- Communicate with the IRS in an attempt to resolve the tax problem by making payment arrangements.
- Explain to the IRS your financial situation if you cannot afford the levy. You may need to do this by filling out a collection information statement.
- If you owe less than $50,000 and can repay the debt within 72 months, the levy release can potentially be expedited.
- Complete and file any outstanding tax returns.
- Once the levy is released, give a copy to your employer.
Facing IRS tax problems is never easy. Fortunately, however, most problems can be resolved. To get started, we encourage you to check out our free guide, The Ultimate Guide for IRS Problems.