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When you fall behind on your debts (including taxes), creditors may take legal action to recover what they are owed. One of the most common tools used to collect unpaid debts is wage garnishment. This is the legal process that allows a creditor, including the federal or state government, to take a portion of your paycheck directly from your employer.
For individuals and families who are already struggling financially, wage garnishment can be overwhelming. Fortunately, Virginia law limits how much money can be garnished to a maximum of 25% of a person’s disposable income. However, these limits do not apply to garnishments for state and federal taxes. Understanding these rules is essential if you are dealing with outstanding debts or unpaid taxes and want to protect your rights.
Based in Virginia Beach, Poole Brooke Plumlee PC offers experienced legal representation to clients throughout Virginia dealing with tax debt and other tax-related issues. If you are dealing with a wage levy from the IRS or a wage lien from the Virginia Department of Taxation, we can help you explore your options. Contact our law firm today to set up a consultation with an experienced Virginia tax lawyer.
What Is Wage Garnishment?
Wage garnishment is the legal process through which a creditor can collect money that you owe by asking your employer to withhold a portion of your wages. This money is then redirected to the creditor. In Virginia, most creditors must obtain a judgment and then issue a garnishment summons in order to garnish an individual’s wages.
The garnishment summons is then sent to the employer, who then deducts the funds from your wages and pays them into the court for the benefit of the creditor. The wage garnishment will continue until the debt, including interest and costs, is fully paid, or until the garnishment return date set forth in the garnishment summons..
There are many different types of debts that may lead to a wage garnishment. Common examples include:
- Credit card debt
- Personal loans
- Medical bills
- Auto loans
Your wages can also be garnished by the government in certain situations. This includes garnishments for federal or state tax debt. However, unlike most creditors, the state and federal taxing authorities are not required to obtain a judgment against you before garnishing your wages.
Both the Internal Revenue Service (IRS) and the Virginia Department of Taxation (Virginia Tax) can garnish your wages to pay your tax debts. If you owe back taxes, the federal government can issue a wage levy, and/or the state can file a wage lien to recover the money. Unlike a wage garnishment from most creditors, a tax garnishment can continue indefinitely, or until the debt is paid, or another arrangement is made.
How Much of Your Wages Can Be Garnished?
Virginia law limits the amount of money that can be taken from your paycheck for wage garnishment. For most debts, the maximum garnishment is the lesser of 25% of your disposable earnings, or the amount by which your weekly disposable earnings exceed 40 times the greater of the federal or Virginia minimum wage.
Disposable earnings are the portion of your wages that remain after legally required deductions are taken out, such as for federal income taxes, state income taxes, Social Security taxes, Medicare taxes, and unemployment insurance. Voluntary deductions (such as retirement contributions) are not usually subtracted when calculating disposable earnings.
However, debts owed to the IRS and the Virginia Department of Taxation are not subject to these limits. The IRS can garnish up to 100% of your disposable earnings. The state allows you to protect only a small, hardship portion of your wages determined by your number of dependents, filing status, and pay period.
How Do I Deal with a Wage Garnishment?
The best way to deal with a wage garnishment is to prevent it before it starts. Once a garnishment starts, it can be very difficult to get it to stop. You can file for bankruptcy, which will stop garnishments and other collection efforts, but that carries its own set of problems and should only be considered after consultation with an experienced bankruptcy attorney that has knowledge of tax matters.
For tax debts, there are a few different options that generally involve working out some type of payment agreement. You might request to pay off your tax debt over time through an installment agreement. You could also enter into an offer in compromise if you can’t pay off the tax debt due to financial hardship. This may allow you to pay a lower amount to settle the tax debt.
In some cases, you may be able to seek an exemption if you have extreme financial hardship such that garnishment or repayment would prevent you from providing for your basic needs. If you dispute the amount owed, you may also file an appeal within 30 days of the IRS Final Notice of Intent to Levy.
It isn’t always easy to know how to handle a debt, particularly if you are struggling financially and simply don’t have the money to pay. If you are dealing with a tax debt, our law firm can help you explore your options.
Work with Experienced Virginia Tax Debt Attorneys
Virginia law offers certain protections when it comes to wage garnishment. However, it is important to understand that these laws do not apply to the federal government. If you have federal tax debt, then the IRS could potentially garnish up to 100% of your disposable earnings each pay period..
At Poole Brooke Plumlee PC, we are skilled at handling both federal and state tax debts. We offer strategic legal representation, working hard to help you find solutions to tax debts and related issues. To learn more or to schedule a consultation with a Virginia tax debt lawyer, call our law firm at 757-499-1841 or fill out our online contact form.
